Selling cash-secured puts on AMZN

Selling a put transfers the downside between $235 and zero to you, and you are paid $5.40 per share for taking it. "Cash-secured" simply means you hold the $23,500 required to buy the shares instead of leaning on margin. Same position, honest denominator.

At October 30, 2026: above $235 the put expires worthless and you keep $540 — that is the maximum this trade can make, $540. Below it you're assigned 100 shares at $235, with an effective cost basis of $229.6 once the credit is applied. That is 8.0% below where AMZN trades today.

The engine puts the probability of keeping the full credit at 75% on AMZN at $249.67 with 40% ATM implied vol on the Oct 30 expiry. High win rate, capped payoff, uncapped-to-zero loss — the risk profile of every short-premium trade. It is not free money; it is a rent cheque for underwriting someone else's insurance.

The real-world failure mode is a gap, and AMZN has the catalysts for one: earnings, AWS growth commentary, and holiday-quarter guidance. A put sold 5.9% out of the money offers no protection at all against a move twice that size overnight.

Assignment is not the loss — being assigned at $235 when AMZN is at $188 is. If you are running the wheel, that is the moment the plan is tested: you own shares at a basis of $229.6 and the market disagrees.

Early assignment is an operational risk rather than a market one: it arrives on a weekend, converts a defined structure into a stock position, and requires cash you may have allocated elsewhere.

The absence of a dividend removes the single most common reason an American short call gets exercised early, which makes Amazon materially easier to manage than a payer at the same delta — you can carry an ITM short call to expiry and reason about it purely on extrinsic value. That administrative edge is worth more to a systematic writer than a point or two of extra IV elsewhere.

AMZN's Oct 30 strikes are $5 apart near the money (2.00% of spot). That is a coarse ladder: one rung is a large fraction of the implied move, so precision on the short strike is an illusion. 146k contracts of open interest on Oct 30 is deep enough that multi-leg orders fill near mid at retail size. 29 strikes on that expiry — 100% of the board — carry prints that agree with their own implied volatility and hold up across the ladder, and those are the strikes priced here. Deep at every strike; the far-dated back month a calendar needs is liquid enough to leg if you must.

The surface is close to flat: only 0.2% between the 25-delta put and the 25-delta call. A flat skew means the usual put-side pickup is not there, so the case for selling downside rather than upside on this name is weaker than the habit suggests. The term structure is backwardated — Oct 30 implies 2.0% MORE vol than the following month. That is the signature of a dated event inside the front month, and it is the strongest argument for picking the expiry that sits behind it.

At 40% ATM implied vol, the Oct 30 options are pricing a one-standard-deviation move of $30.04 over 33 days — roughly −12.0% to +12.0%, or $219.63 to $279.71. The structure above sells the part of that distribution the market thinks it will not reach. Whether that is a good trade is entirely a question of whether 12.0% is too much or too little for AMZN over 33 days — the delta table cannot answer that, and neither can we.

The specific way people lose money on AMZN: Buying the holiday-quarter straddle because the narrative is loud. That print's implied move is usually the year's largest and usually adequate.