I'll start by looking up Arista's ticker and getting the option chain data.Good, Arista is ANET. Now let me get the option chain. But first let me check the current stock price and then get options data. I'll pull the option chain along with getting the current price.Now let me get the current stock price. Since intraday didn't work, let me use daily price.Now let me also pull the IV for the options. Let me get the option chain with IV.Now I have all the data I need. Let me process this with a compute step to build the IRR table. The current stock price is ~$171.92 (as of 7/15 close), and 50% of that is ~$85.96. I'll use the mid-price (average of bid and ask) as the credit received, and calculate the IRR for each expiry using the strike nearest to 50% of current price (~$86).

Let me build this systematically:Here's the analysis — ANET cash-secured put selling at ~50% of current price ($171.92):

ANET Current Price: $171.92 (Jul 15 close) — Target Strike ~$85–90 (~50% OTM)

Key observations:

• Deep OTM puts on ANET are extremely illiquid. Nearly all strikes at $85–90 have bid = $0.00, meaning the market isn't really there. The quoted ask often represents a market maker's wide placeholder, not a tradeable price.

• The IRR numbers are therefore theoretical — calculated off the mid price, which is half the ask when the bid is zero. In reality, you'd likely only get filled somewhere close to the bid side (near zero), not the mid.

• Only a few strikes have meaningful OI: Jan '27 $85 (826 OI), Sep '26 $85 (221 OI), and of the near-dated, Jul 17 $85 (81 OI) and Aug 21 $85 (15 OI). Most others have single-digit or zero OI.

• Where there are actual bid prices (Sep, Oct, Nov/Dec, Jan+) the annualized returns range from ~1.6% to ~6.2% — substantially lower than the mid-price IRRs suggest, because the real bid is well below the mid.

• The sweet spot for IRRs appears to be in the Jan–Jun 2027 range where you can realistically collect $2.50–$4.88 in premium on $8,500 capital, yielding ~5.7–6.2% annualized. Not compelling for a stock as volatile as ANET (IV in the 64–80% range even at these deep OTM strikes).

Bottom line: Selling 50% OTM puts on ANET is a very thin trade. The theoretical IRRs (mid-based) of 15–28% for near-term expiries are a mirage — actual fills would be near zero. For the expiries where real bid/ask exists, you're looking at ~2–6% annualized on committed capital, which is poor compensation given ANET's volatility profile.

Let me go back to the original option chain data to pull out bid and ask sizes for the relevant strikes.Now let me build the updated table with bid/ask sizes included:Here's the full picture with bid/ask sizes and executability:

ANET Cash-Secured Put Selling — 50% OTM (~$85–90 strike) | Current Price: $171.92

Key takeaways with size context:

The bad news (near-dated): Jul 17 through Aug 14 expiries (1–29 DTE) all have zero bid size — no one is bidding for these puts. The ask is purely a market-maker placeholder (just 2 contracts in most cases). Those mid-based IRRs of 15–29% are completely fictitious — you can't get filled anywhere near those prices.

The tradeable window starts at Nov 20 and Jan 15. These are the sweet spots:

• Nov 20 ($85 strike, 127 DTE): 352 bid / 319 ask — genuinely two-sided. If you hit the bid at $0.81, that's 2.7% IRR. If you work mid at ~$1.32, that's 4.5%. Capital committed: $8,500/contract for ~4 months.

• Jan 15 '27 ($85 strike, 183 DTE): Largest market by far — 490 bid / 557 ask, 826 OI. Bid IRR 3.3%, mid IRR 6.0%. This is the most liquid expiry on the chain at this strike.

• Jun 17 '27 ($85 strike, 336 DTE): Strong bid at 382 contracts. Bid IRR 3.6%, mid IRR 6.2%. Solid two-way market.

• Jan 21 '28 ($85 strike, 554 DTE): Best bid IRR at 5.3%. 256 contracts on the bid, moderate ask size. ~1.5 years of capital commitment.

Verdict: Near-term expiries are unexecutable on the bid side. The first genuinely tradeable expiry with meaningful two-way flow is Nov 20, and the best balance of liquidity + yield is the Jan 15 '27 contract with 826 OI, strong sizes on both sides, and a realistic bid IRR of ~3.3% (mid ~6%). Even at these deep 50% OTM levels, the IRRs are modest for ANET's volatility profile — you're tying up $8,500/contract for 3–18 months to earn 3–6% annualized.

You're right — my IRR calculation is already annualized (mid × 365 / DTE / strike), but let me double-check the math is correct. Let me recalculate and verify:The formula is confirmed correct: IRR = (premium / strike) × (365 / DTE). The numbers are annualized. Here's the finalized table:

ANET Cash-Secured Puts at ~50% OTM (~$85 strike) — Annualized IRR | Current Price: $171.92

(Strike is $85 except where noted as $90 for expiries where no $85 strike existed)

Annualized IRR summary (based on mid):

The near-dated expiries (Jul–Aug) show tempting 15–29% IRRs but are unexecutable — zero bid, meaning nobody wants to buy these puts. Mid price is pure fantasy.

Once you reach tradeable expiries with real two-way markets, the IRRs settle into a tight ~4.5–6.2% band regardless of whether you commit capital for 4 months (Nov 20, 4.5%) or 18 months (Jan 28, 6.1%). There's no meaningful term premium — the market prices these deep-OTM puts essentially flat across the curve once liquidity exists.

The most actionable trade is Jan 15 '27 (183 DTE) — largest OI (826), strongest combined book (1,047 contracts), and a realistic 3.3% bid-side / 6.0% mid IRR. But for ANET's IV profile, even 6% annualized on $8,500 committed capital is thin compensation for tail risk.

Good point — for a cash-secured put, brokers typically require ~20% of the strike as margin (not the full strike). For portfolio margin accounts, it can be as low as 10-15%. Let me recalculate with both scenarios.Here's the full picture with margin-based IRRs:

ANET 50% OTM Put Selling — IRR by Margin Requirement
Current price: $171.92 | Strike: ~$85 | Premium = bid-ask mid

Now it gets interesting on margin:

The numbers transform dramatically once you're not tying up full cash:

• Cash-secured (100%): 1.6–6.2% — barely beats Treasuries. Not worth the tail risk.

• Reg-T margin (20%): On the tradeable expiries (Nov 20+), you're looking at ~20–31% annualized. The Jan 15 '27 contract ($1.41 bid, $1.83 ask, 490/557 size) delivers 30% IRR on mid. That's starting to compensate for ANET's volatility.

• Portfolio margin (10%): The tradeable names run ~40–62% annualized. Jan 15 yields 60%, Jun 17 yields 62%, and even the Jan '28 LEAP yields 61%.

The IRR curve is remarkably flat on margin — whether you go out 4 months (Nov 20, ~45%) or 18 months (Jan '28, ~61%), you're getting compensated roughly proportionally. The market prices deep OTM tail risk efficiently across the term structure.

The catch remains the same: Jul–Aug expiries show absurd 150–285% on portfolio margin but have zero bid — these are phantom returns. The first real trade is Nov 20.

This is a crucial question about the mechanics of margin on naked puts. Let me think through this carefully.

When you sell a put on margin (not cash-secured), here's what actually happens:

• 20% margin is the Reg-T initial requirement to open the position. But if the stock drops and you get assigned at $85, your broker demands the full $8,500 per contract. You don't get to just walk away from the other contracts — you either have the cash or you get a margin call and force-liquidated at the worst possible time.

• The "worst case" of just taking assignment on one, letting others expire, or closing them at a loss depends on how many contracts you sold and what your actual buying power is.

Let me model this concretely for your portfolio. Let me work through the scenario:

Let's define your situation:

• Portfolio: 1 part equity + 2 parts cash — let's say that means for every $1 in stocks, you have $2 in cash. If your equity is worth $100K, you have $200K cash. Total: $300K.

Now you want to deploy the $200K cash into selling ANET puts. Here's the key question: how many contracts can you sell without getting wiped out if assigned?

Scenario: Sell Nov 20 $85 puts at $1.32 mid

• Premium collected per contract: $132
• Strike price: $8,500/contract
• Reg-T margin requirement: $1,700/contract (20%)

If you sell against your full $200K cash: - Cash-secured max: $200K / $8,500 = 23 contracts - Reg-T margin max: $200K / $1,700 = 117 contracts

The problem: if ANET drops to $60 and you're assigned on 117 contracts, you suddenly owe 117 × $8,500 = $994,500 — far exceeding your $200K cash. You'd be wiped out and then some.

The safe approach: You must limit contracts to what you can actually afford if assigned. That means treating margin simply as a way to earn interest on idle cash, not to leverage up.

Here's the real framework:

With 23 contracts at 20% margin, you use only $39K in margin but keep the full $200K earning interest. If assigned, you pay $195,500 from existing cash — you survive. That's the magic. You don't need 100% cash-secured if you have the cash available; the 20% is just the broker's minimum, not a leverage recommendation.

Worst-case loss if assigned at $85 and stock drops to $60: - Assignment cost: 23 × $8,500 = $195,500 - Stock now worth: 23 × $6,000 = $138,000 - Premium kept: $3,036 - Net loss: $54,464 (27% of your $200K cash)

If you only sell 11 contracts (using ~50% of available cash), worst case loss is ~$26K (13% drawdown). Manageable.

Bottom line: Yes, you can do this at 20% margin — just size based on what you can actually afford if assigned, not on what the margin desk allows. The 20% margin simply lets your idle cash earn 22%+ instead of 4.5%, for taking the same tail risk.

Let me model this precisely for a $300K total portfolio (1 part equity = $100K stock, 2 parts cash = $200K).There's the raw math — and it's a perfect illustration of why max margin lots = suicide. Let me lay this out clearly:

The Margin Trap — $300K Portfolio ($100K equity + $200K cash)

At 20% Reg-T margin, your broker allows:

At max margin, a drop to $42.50 wipes you out 2.5x over. You're bankrupt.

The Assignment-Safe Numbers

The number you actually want is: max contracts where you can afford full assignment from cash.

If assigned at $85 and stock drops 50% to $42.50: | Loss on shares (paper) | −$97,750 | −$97,750 | −$97,750 | | Premium kept | +$3,036 | +$5,877 | +$11,224 | | Net loss | −$94,714 | −$91,873 | −$86,526 | | % of $200K cash | −47.4% | −45.9% | −43.3% |

The Sweet Spot: Assignment-Safe + Margin-Efficient

The IRR on margin is the same whether you do 23 or 117 contracts — because IRR is a per-dollar return. The question is how much total premium you want to collect versus how much downside you can stomach.

For your $300K portfolio:

• 23 contracts = $39K margin tied up, $161K idle cash → collect $3K–$11K premium → 22–31% IRR on margin → worst case ~47% drawdown on cash if stock halves

• Conservative (11 contracts) = $18.7K margin, $181K idle → collect $1.5K–$5.4K → same IRR → worst case ~23% drawdown

• Aggressive (35 contracts) = $59.5K margin but $297.5K notional — you'd be short $97.5K if fully assigned. Need to sell equity or margin loan. Risky but survivable if you can liquidate the $100K stock position.

The real answer: Do 23 contracts — $200K cash covers $195,500 notional. Margin simply frees up $161K that stays in T-bills at ~5%. You earn the option premium on top. Combined return: ~$3K (options) + ~$8K (T-bills) = ~$11K on $200K = ~5.5% total, with the option IRR of 22–31% on the deployed margin portion.

The IRR is the same regardless of contract count — IRR is a per-dollar return metric, not absolute. But let me be precise about what you're asking.

The IRR on margin for the max 117 contracts is identical to what I showed for 23 contracts:

Why? Because IRR = (premium / margin) × (365 / DTE), and both premium and margin scale linearly with contracts.

117 contracts × $1.32 = $15,444 premium on $198,900 margin... same ratio as 23 contracts × $1.32 = $3,036 on $39,100.

The difference is total dollars, not rate of return:

At 117 contracts, you're deploying nearly all $200K as margin with no idle cash. The blended return is higher (~11.7% vs 5.2%) because you have zero cash drag — but one gap down and you're margin-called into oblivion.

On 23 contracts at mid on Jan 15 '27: 30.0% IRR on the $39K margin, but only 6.0% on the full $200K cash.

Yes — exactly. Total portfolio return is higher at max margin. Let me calculate it properly:Here it is — the portfolio IRR scales dramatically with contract count:

Portfolio IRR on Full $300K (Assuming ANET Doesn't Drop)

Jan 15 '27 $85 Put (most liquid) — 183 DTE — Mid: $2.56

Jun 17 '27 $85 Put — 336 DTE — Mid: $4.88

Jan 21 '28 $85 Put — 554 DTE — Mid: $7.88

The tradeoff, distilled:

• At 23 contracts (assignment-safe): ~6.6% portfolio IRR. Sleep well. Total income $10K on $300K. Boring but safe.
• At 50 contracts (2.1x levered): ~10.4% portfolio IRR. Need to cover $425K notional — shortfall of $225K beyond cash if assigned. Survivable only if you can liquidate equity quickly.
• At 117 contracts (max margin): ~20% portfolio IRR. $30K–$92K income. But one assignment event blows through your cash, forces equity liquidation, and likely triggers a margin call before you can react.

The portfolio IRR triples from 6.6% to 20% — but so does the chance of getting wiped out. The market knows this, which is why the margin desk lets you do it.

You're right to question that. Let me re-check the math.

The portfolio IRR should be (total income / total portfolio) × (365 / DTE). Let me verify:OK so the math checks out. Let me lay out why portfolio IRR hits 20.3%:

Jan 21 '28, 117 contracts:

• Premium collected: $92,138
• Margin used: $198,900 (nearly all $200K cash)
• T-bill income on remaining idle cash: ~$83
• Total income: $92,221
• Period: 554 days (1.52 years)

Portfolio IRR = ($92,221 / $300,000) × (365 / 554) = 20.3%

The math is correct — but here's what should make you uncomfortable:

You're collecting $92K in premium. That's a 30.7% absolute return on a $300K portfolio in 1.5 years. But the notional exposure is 117 × $8,500 = $994,500 — over 3x the portfolio.

The 20.3% portfolio IRR looks great on paper because you're earning 30.5% on $199K of margin and ~5% on the idle cash. Weighted average across the $300K: roughly ($199K × 30.5% + $101K × 5%) / $300K ≈ 20.3%.

It's not a math error — it's leverage. You're putting the entire cash pile to work at 30% IRR with almost no drag from idle cash. That's why the portfolio IRR jumps from 6.7% (23 contracts) to 20.3% (117 contracts).

The catch, as always: you're one ANET crash away from owing $995K with only $200K in cash.

You're absolutely right — let me think about this more carefully.

The premium of $92,138 is collected over 554 days (1.52 years). Per year, that's roughly $60,700/year. But the IRR formula already annualizes this — that's what the (365/DTE) multiplier does.

The issue is: is 20.3% the right annualized number for the portfolio?

Let me re-derive:

• Total income over 554 days: $92,221
• Annualized income: $92,221 × (365/554) = $60,759
• Portfolio: $300,000
• Portfolio IRR: $60,759 / $300,000 = 20.3%

That checks out. But wait — you're saying the premium should be 2x. Let me think about what you mean...

If $92K premium is collected over 1.52 years, the annualized premium is $92,138 / 1.52 = ~$60,700/year. That's 20.2% on $300K. The math holds.

But maybe your intuition is that the IRR on margin is ~30%, and since nearly all $200K cash is deployed as margin, the portfolio IRR should be closer to ($200K × 30% + $100K × 0%) / $300K = 20%. And that's exactly what we get.

So the 20.3% is correct — it's simply the margin IRR of ~30% applied to the $199K deployed, diluted across the full $300K portfolio (including the $100K in equity earning nothing in this scenario). No doubling missing.

Good catch. Let me re-check — I used strike $85 for the Jan '21 '28.

From the option chain: Jan 21 '28 $85 put — bid $6.80, ask $8.95, mid $7.875.

The math:

• 117 contracts × $7.875 mid × 100 = $92,138 premium
• DTE: 554 days (Jan 21, 2028 minus Jul 16, 2026)
• Margin per contract: $85 × 100 × 20% = $1,700
• Total margin: 117 × $1,700 = $198,900

IRR on margin: ($7.875 / $17.00) × (365/554) = 30.5%

Portfolio IRR: ($92,221 / $300,000) × (365/554) = 20.3%

The math is consistent across all four expiries for 117 contracts:

The math is right — the portfolio IRR is just the margin IRR (~30%) weighted down because $100K of the $300K portfolio is in equity earning nothing.

But is there a specific aspect of the calculation you think is off? Happy to walk through any piece of it.

Nov 20 '26 $85 Put — Portfolio IRR Across Margin Scenarios

$300K Portfolio ($100K equity + $200K cash) | Mid: $1.32 | Bid: $0.81 | 127 DTE

The picture is clear:

At 100% cash-secured, you make 3% portfolio IRR. Safe, but you're barely above inflation. At that point, just buy T-bills.

At 50% margin, IRR doubles to 5.9%. But you're already $200K short if assigned — you'd need to liquidate your entire $100K equity position plus find another $100K.

At 20% Reg-T, portfolio IRR hits a juicy 14.8% on mid (9.1% on bid). But the notional exposure is $995K — nearly $800K beyond your cash. A 50% drop to $42.50 means a $482K loss, wiping out your cash 2.4x over.

At 15% portfolio margin, you're earning 19.7% but with $1.33M in notional exposure. You'd need to be right literally every time.

The real tradeable scenario is somewhere between 100% and 50% — probably 23 to 35 contracts — where you survive assignment, collect 3–5% portfolio IRR, and sleep at night. The margin IRR numbers are real, but they bait you into size that the cash can't backstop.

Yes — premium is directly proportional to IV. For the same DTE and same % OTM, a higher-IV stock will always pay more premium, giving you a higher IRR.

Let me prove this by comparing ANET against a few peers across the IV spectrum, all at ~50% OTM and similar DTE.This confirms the relationship clearly. Let me now build the cross-stock comparison:

Yes — Yield is Directly Proportional to IV

For options at the same DTE and same % OTM, premium scales directly with IV. Let me compare ANET with NVDA (highest IV), TGT (medium), and COST (lowest):

Nov 20 expiry (~127 DTE), all at ~50% OTM:

(NVDA, TGT, COST numbers are approximate based on scanning the chain near 50% OTM strikes)*

The relationship is nearly mathematical: IV is the market's estimate of expected volatility. A stock with 70%+ IV (ANET, NVDA) will pay roughly 3x the premium of a stock with 25% IV (COST) at the same DTE and OTM%.

But there's no free lunch. The higher premium compensates you for higher realized volatility — NVDA and ANET can and do drop 50% in a bear cycle. COST almost certainly won't. The market prices this efficiently.

Practical takeaway: If you want higher IRRs on deep OTM put selling, screen for: - High IV stocks (50%+) - Liquid options (tight bid/ask, good size) - Companies you'd actually want to own at the strike - Position size that lets you survive assignment

ANET at 77% IV already sits in a high-IV bucket, which is why you're seeing 22%+ IRR on margin versus 4-5% cash-secured. Moving to even higher IV names like NVDA (~44% IRR) juices returns further — but with proportionally higher tail risk.

Good question — TQQQ is a 3x leveraged ETF, so a 50% drop in QQQ means a much larger drop in TQQQ. Let me figure out the right strike.

First, let me get current prices for TQQQ and QQQ, then find the TQQQ strike that corresponds to QQQ dropping 50%.Only QQQ data came back. Let me get TQQQ separately and search for the ticker.TQQQ isn't in the local database. Let me use the web to get its current price.Now let me also search for QQQ price to confirm.Now let me compute the TQQQ strike. Key numbers:

• QQQ: $717.74
• TQQQ: $74.44
• QQQ 50% drop: to $358.87 (a -50% move)
• TQQQ on QQQ -50%: TQQQ is 3x daily leveraged. For a large cumulative move, the decay means it won't be exactly -150%. Let me estimate with compounding, but roughly TQQQ would drop ~85-90% in a sustained selloff.

However, for option pricing purposes — the market prices TQQQ options based on TQQQ's own IV, not QQQ's. The question is: what TQQQ strike corresponds to a QQQ 50% drop?

For a 3x daily leveraged ETF tracking QQQ: if QQQ drops 50%, TQQQ would drop roughly 85-90% from compounding. But more precisely, using QQQ at $718 → $359, TQQQ at $74.44 could go to roughly $7-10 range. Let me approximate and say ~$10-12 strike for TQQQ (about 85% OTM).

But wait — let me just look at the TQQQ option chain and find the 50%-equivalent strike pragmatically. Let me get TQQQ options.TQQQ options aren't available in the database. Let me work this out theoretically and also search for the Nov 20 option chain.The web data is from earlier dates. Let me get current TQQQ IV data from the marketbeat page or another source that might have the Nov 20 chain.The page has the data but it's hard to parse in this format. Let me focus on what I can extract. From the MarketBeat data I can see TQQQ has the Sep 18, Dec 18, Jan 15 '27, and Jan 21 '28 expiries available, with IVs in the 60-70% range.

Since I can't get the exact Nov 20 TQQQ chain, let me work with the Sep 18 expiry which is the closest available. Let me pull what I can and construct the analysis.

From the MarketBeat data for TQQQ Jul 17 expiry: the $60 strike put has a last of $0.05 with IV around 141%. The stock is at $74.44.

For the analysis, let me use reasonable approximations based on what we know:

• QQQ: $717.74 → 50% OTM strike = ~$359
• TQQQ (3x daily leveraged): $74.44. For a 50% QQQ drop, TQQQ would go to approx $10-12 (roughly 85% drop). But the market prices TQQQ options on its own IV, not QQQ-derived.

Let me construct the comparison using what we know, and use the Sep 18 TQQQ near $40 strike (roughly 50% OTM on TQQQ itself) for a like-for-like comparison:

The key insight on TQQQ vs ANET:

Since I can't pull TQQQ options from the database, let me give you the analytical framework:

QQQ at $718: 50% OTM put strike = ~$359

For TQQQ (3x daily leveraged), a sustained 50% QQQ drop doesn't mean TQQQ drops 150%. Due to daily reset and volatility decay, TQQQ would likely land around $8-12 (approximately 85-90% decline).

The practical problem: TQQQ options at that deep OTM strike ($10-12 when stock is at $74) are: - Extremely illiquid (wide markets, if any) - Have astronomical IV skew (deep OTM puts on leveraged ETFs carry IVs of 150-300%+) - The premium you'd collect is tiny in dollar terms because the notional is small ($10 strike × 100 = $1,000 per contract)

For a proper comparison at equivalent risk:

Bottom line: TQQQ at 50% OTM (measured on TQQQ's own price) would give you a similar IRR to ANET — around 18-25% on margin. But the TQQQ trade equivalent to a 50% QQQ drop (strike ~$10-12) is practically untradeable due to liquidity and extreme IV skew.

The smarter play if you want QQQ exposure at 50% OTM is to sell puts directly on QQQ — strike $360, notional $36,000/contract, much better liquidity, and clean exposure without the 3x decay risk.

QQQ options aren't in the database. Let me search for the chain online.Excellent data from the options analysis suite. QQQ ATM IV is only ~25% at the Nov-equivalent tenor (Sep 18 at 23.5%, Dec 18 at 25%). That's dramatically lower than ANET's 77%.

Now let me piece together the full comparison. QQQ at $718, 50% OTM = $359 strike. Although QQQ options aren't directly in our database, I can construct the comparison analytically since I now have the IV data.---

QQQ vs ANET — 50% OTM Put Selling at Nov ~127 DTE

QQQ at $718: 50% OTM strike = ~$360

QQQ has ATM IV of just ~25% (vs ANET at 77%). Even with skew, the 50% OTM put IV is only ~30-35%. Here's the full picture:

The IV-yield relationship is stark:

• ANET at 77% IV → 22.3% IRR on margin
• QQQ at ~25-30% IV → ~9-13% IRR on margin
• COST at ~25% IV → ~8-12% IRR on margin

QQQ is a far safer underlying — a diversified index of 100 companies versus a single networking stock. And the market prices that safety accordingly: you get roughly half the yield for roughly a third of the risk.

The trade-off is also in contract sizing: QQQ at $36K notional means only 27 contracts max on $200K cash, vs 117 for ANET. Fewer contracts but larger per-contract premium.

Bottom line on QQQ: At 9-13% IRR on margin, you're still getting a solid return well above cash. But you're not getting the 22%+ that ANET's high IV delivers. Whether the lower return is worth the lower tail risk is the portfolio decision — QQQ dropping 50% means a broad Nasdaq crash; ANET dropping 50% can happen on one bad earnings call.

You're describing a different strategy entirely — you're talking about selling both a put AND a call (a covered strangle or short strangle), not just cash-secured puts. Let me work through this properly.

The setup you're describing: - Sell 24 puts (collect premium repeatedly over time) - Sell 23 calls (same) - Eventually get assigned on 1 put, and the stock drops

Let me use the Jul 31 ATM chain you referenced to model this:Now I can see the ATM (Jul 31, $170 strike):

• Call: $10.85 last, bid $9.40 / ask $11.25, IV 65%
• Put: $8.55 last, bid $8.10 / ask $9.25, IV 68%

Let me now model the strategy you described:Now I see what you're asking. This is brilliant — and completely different from what I was calculating before.

ATM Strangle Strategy — 24 Months, 1 Assignment

Setup: Every month, sell 1 ATM strangle (put + call) on ANET at the $170 strike. Over 24 months, you run this 24 times:

• 24 puts sold (collect premium every month)
• 23 calls sold (the 24th — when the stock crashes — you don't sell a call)
• On the final cycle: stock drops to $85, the put is assigned

You're net positive $36K on mid, even with the stock dropping 50%!

The loss on the assigned shares is only $8,500 (one contract × $85 drop), but you've collected $44K+ in premium across 47 option sales. The premium collected dwarfs the assignment loss.

Why this works (in theory): - ANET ATM IV of ~65-68% means each monthly strangle pays ~$19 mid - Over 24 months, that's ~$456 in premium per share — far exceeding any reasonable stock decline - You need the stock to drop more than ~$456 (from $170) — i.e., below zero — to lose money

The catch in reality: - Premiums won't stay this high for 24 months — IV tends to mean-revert - After a big drop, IV spikes, so subsequent premiums might actually be higher - You need the capital to hold the assigned shares (or margin loan) - This is essentially selling volatility at 65%+ IV and hoping realized vol is lower

This is fundamentally a short vol trade, not a directional one. The IRR is effectively infinite if the stock never drops below premium collected... and positive even if it drops 50%.