Netflix (NFLX) is due to report earnings after the market close on April 16th and the market is pricing in a 6.94% move in either direction. 

Implied volatility is 42.37% which gives NFLX an IV Percentile of 77% and an IV Rank of 38.81%.

Netflix is considered a pioneer in the streaming space. The company evolved from a small DVD-rental provider to a dominant streaming service provider, courtesy of its wide-ranging content portfolio and a fortified international footprint.

Netflix has been spending aggressively on building its original show portfolio. This is helping it sustain its leading position despite the launch of new services like Disney and Apple TV as well as the existing services like Amazon prime video.

Netflix streams movies, television shows and documentaries across a wide variety of genres and languages. Subscribers, both domestic and international, can watch them on a host of internet-connected devices, including television sets, computers and mobile devices. In the Domestic DVD segment, Netflix delivers DVDs through the U.S. postal service from distribution centers located in major U.S. cities.

Netflix Earnings Iron Condor

Today, we’re going to look at an iron condor trade placed over earnings. These types of trades can be high risk, so make sure you understand how they work before attempting something like this.

Ideally, we would like to close it out before earnings.

An iron condor aims to profit from a drop in implied volatility, with the stock staying within an expected range.

When implied volatility is high, the wider the expected range becomes.

The maximum profit for an iron condor is limited to the premium received while the maximum potential loss is also capped. To calculate the maximum loss, take the difference in the strike prices of the long and short options, and subtract the premium received.

Trade Setup

As a reminder, an iron condor is a combination of a bull put spread and a bear call spread.

The idea with the trade is to profit from time decay while expecting that the stock will not move too much in either direction.

First, we take the bull put spread. Using the April 17th expiry, we could sell the $85 put and buy the $80 put. Then the call side could be placed by selling the $105 call and buying the $110 call. 

In total, the iron condor will generate around $0.92 per contract or $92 of premium.

The profit zone ranges between $84.08 and $105.92, which is quite a wide range for Netflix. This can be calculated by taking the short strikes and adding or subtracting the premium received.

As both spreads are $5 wide, the maximum risk in the trade is 5 – 0.92 x 100 = $408.

Therefore, if we take the premium ($92) divided by the maximum risk ($408), this iron condor trade has the potential to return 23%.

If price action stabilizes, then iron condors will work well. However, if NFLX stock makes a bigger than expected move, the trade will suffer losses.

Trades held over earnings allow little room for adjusting, so they can be a bit hit or miss. 

Conclusion And Risk Management

This iron condor on Netflix offers a well-balanced, high-probability setup for options traders seeking steady income with defined risk. By targeting short strikes that sit outside key support and resistance levels, the trade benefits from time decay while maintaining a healthy risk/reward profile.

Remember to close before earnings if you do not want earnings risk.

Please remember that options are risky, and investors can lose 100% of their investment. 

This article is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions.

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