I need help managing a bull put; I did not fully understand the trade.

[spy]

I wasn't complicating things.

It may not be complicated for you, but I'm not so sure about @klattermusen since he said:

I think the stock gets assigned to me if the stock price is between 11 and 10 by op-ex on Nov 25. I did not know that. Now I do.

So, I don't think what's good for the goose is good for the gander in this case. If @klattermusen tries to get too fancy with it he's likely to dig himself a deeper hole IMHO.

And, obviously, I agree with you completely here:

Implied vol. is not the same as real vol. Implied vol. can be through the roof but it's the realized volatility that determines everything.

That's why my suggestion (specifically to @klattermusen) is don't touch it and LET IT RIDE. It might just make money at expiration and if it loses that's the price paid for a mistake. But, trying to patch it over now is probably throwing good money after bad.

 

[TheDawn]

It may not be complicated for you, but I'm not so sure about @klattermusen since he said:



So, I don't think what's good for the goose is good for the gander in this case. If @klattermusen tries to get too fancy with it he's likely to dig himself a deeper hole IMHO.

Anyway, just want to cover all the bases. That's how I trade. And there is no range for exercise here, once the underlying goes below $11, the strike on the short put, the option will be auto-exercised unless the option trader sends specific instructions to the broker not to exercise so there is a good chance that the OP would get assigned. I hope @klattermusen sees that.

But no worry hopefully the OP would profit from the up move starting in the week after as he anticipated.

 

[taowave]

IOf course he bought the lower put..It wasnt a 2 for one special,sell one put,get one for free..

Doesn't matter what anyone thinks,he sold a put vertical,he bought the lower strike.You are way too smart for your own good..

How do you know the lower leg,i.e protection is no good??

And what does Ex dividend have to do with when to "lift a leg" to go long?? Again,there's a reason he sold a put spread vs a naked put,and the Div was priced in,otherwise you would do conversions all day long.

FWIW,you are suggesting two opposite strategies..


And I never ever suggested lifting a leg.I said if he's assigned,it's so big deal,he's in the synthetic call.Yes,I am assuming he knows come expiration,he has some decisions to make

Know your audience,keep it simple.

Both of you missed the point. The OP didn't buy that put. It came as part of the put spread.

Anyway that's not how I think when I do bull put spread. I do bull put spread because I speculate the underlying wouldn't go below the strike of the short put and then do the long leg as a hedge in case if the price falls through the short strike. I am sure the OP thought like too that without realizing it was going to go ex-div before the expiration date.

I wasn't complicating things. I am NOT suggesting lifting the long put leg NOW. I am saying AFTER the ex-div. There is nothing wrong with lifting a leg if the leg is no good and lifting it would lower the cost. Why still be stuck with the 60 cent risk when you can decrease it if you can lift the long leg when there is still some extrinsic value left even if it's OTM? Why let it expire worthless when you can do something about it. You said it yourself @taowave,



I like to cover all bases. Implied vol. is not the same as real vol. Implied vol. can be through the roof but it's the realized volatility that determines everything. That long put only has three days to go ITM after the ex-div if it hasn't gone DITM then. Within these three days, if the price doesn't go further down, there is no harm in lifting that long put leg when there is still some extrinsic value left. That's all I am saying.

Starting Monday, because OP believes that the underlying will go back up, if the OP has the underlying, he can buy a put or put debit spread (to save some money) to hedge.

If OP wants to do a pure options play, if it's me, I would do a bull put spread or a single call if the up move is REALLY strong with the potential price surpassing call strike + call premium.

This is what I would do.

 

[TheDawn]

IOf course he bought the lower put..It wasnt a 2 for one special,sell one put,get one for free..

Doesn't matter what anyone thinks,he sold a put vertical,he bought the lower strike.You are way too smart for your own good..

How do you know the lower leg,i.e protection is no good??

And what does Ex dividend have to do with when to "lift a leg" to go long?? Again,there's a reason he sold a put spread vs a naked put,and the Div was priced in,otherwise you would do conversions all day long.

FWIW,you are suggesting two opposite strategies..


And I never ever suggested lifting a leg.I said if he's assigned,it's so big deal,he's in the synthetic call.Yes,I am assuming he knows come expiration,he has some decisions to make

Know your audience,keep it simple.

I said what I needed to say. If @klattermusen has any questions, he's free to contact me and I am happy to help as I have done to many others. You are totally twisting my words around either because you didn't bother to read my posts thoroughly or twisting them around on purpose. I hope it's the former. If it is the former, I strongly suggest that you re-read my posts more carefully.

I seriously thought you were going to come back with more meaningful insight on this and we were going to have a good discussion about this. Really disappointed about this. Anyway I am not going to answer to any of this. It's the weekend. I am stepping out.

 

[taowave]

I read your posts very carefully...

Have you??

 

[TheDawn]

I read your posts very carefully...

Have you??

Read it again:

I like to cover all bases. Implied vol. is not the same as real vol. Implied vol. can be through the roof but it's the realized volatility that determines everything. That long put only has three days to go ITM after the ex-div if it hasn't gone DITM then. Within these three days, if the price doesn't go further down, there is no harm in lifting that long put leg when there is still some extrinsic value left. That's all I am saying.

Starting Monday, because OP believes that the underlying will go back up, if the OP has the underlying, he can buy a put or put debit spread (to save some money) to hedge.

If OP wants to do a pure options play, if it's me, I would do a bull put spread or a single call if the up move is REALLY strong with the potential price surpassing call strike + call premium.

This is what I would do.

 

[newwurldmn]

I read your posts very carefully...

Have you??

Do you remember the phrase about arguing with pigs?

 

[spy]

Do you remember the phrase about arguing with pigs?

Matthew 7:6? I just love the biblical reference guessing game!

 

[newwurldmn]

Matthew 7:6? I just love the biblical reference guessing game!

no.

Don’t argue with pigs. You both get dirty but the pig likes it.

this thread devolved. Tao answered the question in the first 3
Posts, and then the pigs came.

 

[spy]

I take personal offense to that good sir!

no.

Don’t argue with pigs. You both get dirty but the pig likes it.

this thread devolved. Tao answered the question in the first 3
Posts, and then the pigs came.