A trade went bad, kind of... :-)

[earth_imperator]

Short-sold some weeks ago FFIE 7.5 Put ATM. After a week or so USpot fell badly to 2.00 ,
and today rose about 25% to 2.50. IV was and still is high (about 190).
Funny, I'm still only just 10% down with this position, says broker's software, and that's correct according to B/A calcs.
Should I somehow try to "rescue" this position (doubling down, or extending it to a spread etc.)?
Or should I take the said 10% unrealized loss and close it now?
Or should I rather just wait till expiry, hoping for some better days?
ExpDate is Jan-2022 (about 171 calendar days left).
Here the 6M chart, I opened the pos at the peak of the underlying (yeah, bad timing, was thinking it breaks-out... ).
Any constructive advice?

 

[murray t turtle]

Short-sold some weeks ago FFIE 7.5 Put ATM. After a week or so USpot fell badly to 2.00 ,
and today rose about 25% to 2.50. IV was and still is high (about 190).
Funny, I'm still only just 10% down with this position, says broker's software, and that's correct according to B/A calcs.
Should I somehow try to "rescue" this position (doubling down, or extending it to a spread etc.)?
Or should I take the said 10% unrealized loss and close it now?
Or should I rather just wait till expiry, hoping for some better days?
ExpDate is Jan-2022 (about 171 calendar days left).
Here the 6M chart, I opened the pos at the peak of the underlying (yeah, bad timing, was thinking it breaks-out... ).
Any constructive advice?

View attachment 290906

%%
WHAT's the plan??
I cant think of a worse idea--------adding to losers;
except some battle plans call for scale in. But that's a tested plan +not an after thought
IF its a ''POS '' [or bad loss] i would never add to it.
I cut a loss on SPXL today + smaller profit of SPYG. But i like capital, so the goal includes a plan. Hope this helps; it helped me.

 

[wastelands]

Short-sold some weeks ago FFIE 7.5 Put ATM. After a week or so USpot fell badly to 2.00 ,
and today rose about 25% to 2.50. IV was and still is high (about 190).
Funny, I'm still only just 10% down with this position, says broker's software, and that's correct according to B/A calcs.
Should I somehow try to "rescue" this position (doubling down, or extending it to a spread etc.)?
Or should I take the said 10% unrealized loss and close it now?
Or should I rather just wait till expiry, hoping for some better days?
ExpDate is Jan-2022 (about 171 calendar days left).
Here the 6M chart, I opened the pos at the peak of the underlying (yeah, bad timing, was thinking it breaks-out... ).
Any constructive advice?

View attachment 290906

close the position you will be in for a rough ride after that kind of a fall off the top it will bounce and if you do not close now you are looking for a total account wipe out

 

[earth_imperator]

My "pos" above means position, not POS Although....

This pos just makes about 1/10 of the acct, so a loss of 10% of that is "acceptable" (as it means just 1% acct loss), though nobody likes losses...

 

[wastelands]

My "pos" above means position, not POS Although....

This pos just makes about 1/10 of the acct, so a loss of 10% of that is "acceptable", though nobody likes losses...

10% is not 'acceptable' never do anything like that again you should be closing at max 2 %

 

[earth_imperator]

10% is not 'acceptable' never do anything like that again you should be closing at max 2 %

This is IMO impractical with options trading as the ones I trade usually have low volume and wide B/A spreads.
Much different from currency trading (fx), or trading very liquid stocks etc.
What assets do you trade where such tight stop/loss is possible? Index trading?

 

[earth_imperator]

%%
WHAT's the plan??

Close early at +25% profit target, if that occurs, else just hold it till expiry since credit was enough.
Otherwise re-analyze situation in a graphical option tool and then either doubling down if it makes sense, or take the damn loss...
So, I have my plan, I posted this case only to see what others would recommend to do in such a case.

I cant think of a worse idea--------adding to losers;
except some battle plans call for scale in. But that's a tested plan +not an after thought
IF its a ''POS '' [or bad loss] i would never add to it.

Trying to find the right spot...
But IMO sometimes doubling down (scaling-in/out) makes sense.

I cut a loss on SPXL today + smaller profit of SPYG. But i like capital, so the goal includes a plan. Hope this helps; it helped me.

Thx. It helps me one day finding my own way.

 

[zghorner]

This is IMO impractical with options trading as the ones I trade usually have low volume and wide B/A spreads.
Much different from currency trading (fx), or trading very liquid stocks etc.
What assets do you trade where such tight stop/loss is possible? Index trading?

yes this is a problem with options and a big reason I abandoned them...the price swings are so large compared to other trading vehicles that you will go broke using stops (unless trading long dated/LEAPS only).

you did good selling when IV was high from spike...but should have sold a call considering this thing is in a long term down trend and general conditions have been bearish lol...yea that's right, I'm a hindsight keyboard genius. and why are you selling 6 month options? I always thought the idea was to short 45 DTE or less due to theta curve?

It might come back up for you but IMO the odds are against you. Sorry for ya dude i know it sucks.

IMO what it came down to for me was learn the various spread strategies to define risk, how and when to implement them, or move on to something else...I couldn't get them down so moved on. good luck

 

[murray t turtle]

Close early at +25% profit target, if that occurs, else just hold it till expiry since credit was enough.
Else re-analyze situation in a graphical option tool and then either doubling down if it makes sense, or take the damn loss...
So, I have my plan, I posted this case only to see what others would recommend to do in such a case.


Trying to find the right spot...
But IMO sometimes doubling down (scaling-in/out) makes sense.


Thx. It helps me one day finding my own way.

%%
OK by me. Easy to overstay in a bear rally, SPY. I haven't even looked @ SPXL since i cut a loss on it; but SH is going up again/ so that's not good for spxl

 

[earth_imperator]

yes this is a problem with options and a big reason I abandoned them...the price swings are so large compared to other trading vehicles that you will go broke using stops (unless trading long dated/LEAPS only).

you did good selling when IV was high from spike...but should have sold a call considering this thing is in a long term down trend and general conditions have been bearish lol...yea that's right, I'm a hindsight keyboard genius.

This is a new EV car company attempting to begin its first production line within weeks, so was my analysis then. Then the company said they need to raise some more capital, and the production was delayed. This bad news caused the crash of the stock... :-( But I think now after finding additional cash (cf. news) it should continue as before...

and why are you selling 6 month options? I always thought the idea was to short 45 DTE or less due to theta curve?

Hmm. I'm new to options selling, have never heard that saying yet.
Actually my option scanner is to blame for this pick...

It might come back up for you but IMO the odds are against you. Sorry for ya dude i know it sucks.

Yeah, thx for the confirmation

IMO what it came down to for me was learn the various spread strategies to define risk, how and when to implement them, or move on to something else...I couldn't get them down so moved on. good luck

Yeah, indeed, spreads are at top on my todo list. Thx.