Repair Strategy for NFLX Short Put

[El OchoCinco]

Give thanks to your creator that you only sold 1 contract. Short puts have been the death of many traders. Take your medicine and move on.

It is almost criminal how short puts are "sold" as a trading strategy by advisories, newsletters, books and various other uneducated sources and how many beginners make money at first and think they found the holy grail and then get their cheeks clenched. I have had many conversations with beginners where I could NOT convince to abandon naked put selling for
"income" and just had to walk away knowing the crash was coming and I could not do anything to stop it. Sometimes people have to learn on their own.

 

[harryp]

It is almost criminal how short puts are "sold" as a trading strategy by advisories, newsletters, books and various other uneducated sources and how many beginners make money at first and think they found the holy grail and then get their cheeks clenched. I have had many conversations with beginners where I could NOT convince to abandon naked put selling for
"income" and just had to walk away knowing the crash was coming and I could not do anything to stop it. Sometimes people have to learn on their own.

I was very amused to see a thread on another website (or was it here) which said you know I am not writing puts, but covered call works ... the best strategy. Everyone was LOL.

 

[El OchoCinco]

In general for earnings with something like NFLX buy a strangle somewhere less than 1% away from the price. Bad earnings price should drop less than 1% and same for good earning on the plus side. DS the call or put difference should make you $. If the stock has been down for a while then good earnings will pop it more and vice versa. So look for those stocks. NFLX premiums trend to be expensive.

Sounds like you are advising to BUY options when IV is usually inflated prior to earnings...This is a beginner way of thinking but I advise against it until you study about implied volatility as well as understand that a stock can post good earnings and simply drop a bit because it already ran up a lot based on expectations. It is never as easy as"Buy strangle/straddle before earnings and watch the money roll in". market makers don't give away premium on a volatile stock right before earnings....