META bull put spread: credit, risk, strikes

You are still selling downside — just not all of it. The long $515 put cuts the tail off below that level, which is why this needs $1,104 of buying power instead of the $53,000 a cash-secured put would tie up.

Above $530 at August 28, 2026, both puts expire worthless and you keep the full $396. Below $515, you lose the maximum $1,104. Breakeven is $526.04.

Return on risk is 36% for 27 days — 485% annualized. That headline is the reason people prefer spreads to cash-secured puts, and the reason spreads blow up accounts: the same capital supports several times the notional risk.

The risk is leverage, not the structure. $1,104 per spread is small; the temptation to sell ten of them because the buying power allows it is how a 70%-win-rate trade produces a losing year.

Between the strikes the loss scales linearly, so most of the damage happens fast when META breaks $530. There is no assignment-and-hold escape hatch: the long put you own expires the same day.

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 notional is the story. One contract controls a five-figure position, so a covered call here is not a starter trade and a cash-secured put ties up more capital than most retail accounts want in one name. What you get for it is a genuinely elevated between-print premium — Meta implies more vol than it realizes for most of the quarter and then makes up the difference in a single session.

META's Aug 28 strikes are $5 apart near the money (0.90% of spot). That is workable, but it means a one-rung move in a strike is a real change in the trade, not a tweak. 17k contracts of open interest on Aug 28 is workable around the money and thin in the wings — width costs more here than the ladder suggests. 46 strikes on that expiry — 40% 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. Liquid, but the dollar-wide strikes near the money mean spreads at retail width need several rungs — check the ladder before assuming a $5 wing exists.

Skew is inverted: the 25-delta CALL implies 3.8% more vol than the put. That is the market pricing upside risk above downside risk — a squeeze, a takeover rumour, or a crowded short. Selling calls into an inverted skew pays better than usual and is riskier than usual for exactly the same reason. The term structure is flat inside 1.5% between the two captured expiries, so there is no calendar edge to harvest and no event visibly priced into one month over the other.

At 40% ATM implied vol, the Aug 28 options are pricing a one-standard-deviation move of $60.16 over 27 days — roughly −10.8% to +10.8%, or $496.55 to $616.87. A short-premium structure here is a bet that 10.8% over 27 days is more than META will actually use. That is the thesis, stated honestly.

The mistake this name punishes hardest: Underestimating position size because the delta looked small. On a name at this price, a single condor's max loss is a real fraction of a retail account.