$ROKU Options Intelligence

🎯 SELL ROKU DEC 19 100/110 CALL SPREAD

I recommend a bear call spread because Roku's options show extremely high implied volatility (IV) with a 30-day Clean IV around 53% to 56%, well above the baseline 90-day historical volatility of 37.1%, indicating options are overpriced and favor premium selling. The stock price is currently $93.19, below the 50-day and 20-day moving averages (~$98.82 and $97.29), and the MACD is bearish, suggesting limited near-term upside. Additionally, institutional selling by Marshall Wace LLP and insider sales pressure the stock. Despite a positive medium-term outlook, the near-term technicals and elevated IV favor a defined-risk credit spread on the call side.

Sell ROKU Dec 19 100/110 Call Spread
Stock Price: $93.19 | Entry: Sell 100 Call at approx. $3.00, Buy 110 Call at approx. $1.00 → Net Credit ≈ $2.00

📊 Trade Metrics

• Max Risk: $8.00 (spread width $10 - credit $2)
• Max Reward: $2.00 (net credit received)
• Breakeven: $102.00 (strike 100 + credit $2)
• Probability of profit: Moderate-high, given stock below 100 strike and bearish momentum
• Days to expiration: 14 (Dec 19)

📈 Term Structure & Volatility Analysis

• Baseline 90-day Vol: 37.1%
• 30-day Clean IV: ~53-56% (over 15% above baseline, strong sell premium signal)
• Market IV Rank: 100% (very high)
• Earnings: Feb 12, 2026 (trade expiry well before earnings, avoiding earnings volatility)
• Expected daily move: ±$3.48 (~3.7%) supports strike selection above current price
• Calendar opportunity limited due to high IV across expiries, so selling premium is preferable

📈 Greeks & Volatility

• Delta on 100 Call ~0.28 (moderate OTM)
• Theta positive for seller, benefiting from time decay
• Vega negative, benefits if IV declines after trade initiation

🎯 Why This Trade

The term structure reveals Roku options are significantly overpriced relative to historical volatility, creating an ideal environment to sell premium. The stock is trading below key moving averages with bearish MACD and neutral RSI (~42), indicating limited upside momentum in the short term. Institutional selling by Marshall Wace LLP and insider stock sales add downward pressure. The Fed rate cut expectations are boosting consumer discretionary stocks generally, but Roku’s recent pullback and elevated IV suggest a cautious stance. Selling the 100/110 call spread captures premium from inflated calls while capping risk if Roku rallies unexpectedly. The Dec 19 expiration provides enough time for premium decay without exposure to the upcoming February earnings event.

📊 Pro Analysis

• Current IV 59.3% vs historical 41.5%, IV Rank 100% (favor selling premium)
• Put/Call Volume Ratio 0.14 (heavy call buying, good liquidity on calls)
• Market Maker Max Pain: $100 (aligns with short strike)
• Technicals: Price $93.19 below 20-day MA $97.29 and 50-day MA $98.82, MACD bearish -1.50 (signal -1.22)
• Sector peers showing mixed signals but Roku’s fundamentals remain solid with positive earnings growth outlook

🔍 Earnings Date Check

Earnings on Feb 12, 2026; Dec 19 expiry is well before earnings, so this trade avoids earnings volatility risk.

💡 Trade Management

• Entry: Place limit order to sell the 100 call at $3.00 and buy the 110 call at $1.00, net credit $2.00
• Target: Close position at 50% of max profit (~$1.00 debit) or if Roku approaches $100
• Stop: Consider exiting if Roku rallies above $103 (well above breakeven)
• Time stop: Close 2 days before expiration to avoid last-minute gamma risk

🔒 Pricing Validation

• 100 Call intrinsic value: max(0, 93.19-100) = 0, trading at ~$3.00 (OTM) ✅
• 110 Call intrinsic value: 0, trading at ~$1.00 (OTM) ✅
• Spread max loss $8, credit $2, net debit for risk $8 - $2 = $6 (correct structure) ✅

🔍 Market Overview

The market is pricing in a high probability (~89%) of a Fed rate cut at the December FOMC meeting, boosting consumer discretionary stocks like Roku. However, Roku’s recent price weakness, institutional selling, and insider stock sales weigh on sentiment. Technically, the stock is below key moving averages with bearish momentum indicators, suggesting limited near-term upside. The high IV environment (IV Rank 100%) makes selling premium attractive to capture time decay. Roku’s fundamentals remain solid with strong expected earnings growth, but the near-term technical and volatility setup favors a defined-risk bearish call spread rather than outright long premium or bullish trades.

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Confidence Level: Moderate to High — The trade capitalizes on elevated IV and bearish technicals, with capped risk and a clear exit plan. The main risk is a sudden bullish catalyst pushing the stock above $110, but the 10-point width and conservative strikes limit losses.

Risk Assessment: Defined risk of $8 per spread with max reward of $2. The trade benefits from time decay and potential IV contraction but is vulnerable to sharp upside moves above $110. Proper stop management recommended.