Why Selling This Iron Condor Spread in NFLX Makes Sense for a $4.1 Credit

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This NFLX Iron Condor Aims for 69% ROI in 12 Days

Outlook is neutral, with stock confined to a band of ±5%

Strategy has +69% ROI potential and 10% overvalued

Buy367.5 Put
Sell377.5 Put
Sell420 Call
Buy430 Call

Netflix has seen its price drop -0.3% today to $391.97. Over the last two weeks, the stock has traded between $329.62 and $405.11. Implied volatility for NFLX is down -0.9% today, indicating the market is potentially forecasting lower volatility in the weeks ahead. Based on historical stock price behavior, this spread for NFLX has a theoretical 81% success rate.

Option Profit Calculator for NFLX Iron Condor at 16-Jun-23 Expiration

If NFLX stock price at expiration is between $377.50 and $420.00, this spread has a 69% upside potential

As you can see in the chart above, the optimal outcome is for NFLX stock price to close between $377.50 and $420.00 at the June 16, 2023 expiration. Within that price range, all of the options will expire worthless, and you'd keep the original $4.10 credit you received at the time of the trade.

The maximum gain will be realized if the stock price is between $377.50 and $420.00. The maximum gain is $4.10

The maximum loss would occur if the stock price at expiration is below $367.50 or above $430.00. The maximum loss is $5.90

NFLX Spread Current Market Price vs. Historical Average

NFLX Iron Condor is trading at a 10% premium to historical average.

Using historical data to measure how a similar spread in NFLX was priced in the market, the 4-year average value was 3.73, with a high mark of 5.06 and a low of 1.74.

Currently, this iron condor is bid at 4.10 and offered at 4.60. The midpoint of the spread is 4.35.

If we use 3.73 as our historical fair value benchmark, the current market bid price is at a 10% premium, while the current market midpoint represents a 17% premium.

Current PriceHistorical Values of Similar Iron Condors
Market Chameleon captures daily records of market data to calculate historical benchmarks and generate estimated values.

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NOTE: Stock and option trading involves risk that may not be suitable for all investors. Examples contained within this report are simulated And may have limitations. Average returns and occurrences are calculated from snapshots of market mid-point prices And were Not actually executed, so they do not reflect actual trades, fees, or execution costs. This report is for informational purposes only, and is not intended to be a recommendation to buy or sell any security. Neither Market Chameleon nor any other party makes warranties regarding results from its usage. Past performance does not guarantee future results. Please consult a financial advisor before executing any trades. You can read more about option risks and characteristics at theocc.com.

The information is provided for informational purposes only and should not be construed as investment advice. All stock price information is provided and transmitted as received from independent third-party data sources. The Information should only be used as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments and trading strategies. The Company does not guarantee the accuracy, completeness or timeliness of the Information.