Short put is deep ITM. Advice!

taowave said:
I thought you were much deeper in the hole,Stock is at 89.78 and you initial Break even was 91.90..

Knowing nothing about the stock other than the 1 year price range and 30 day "rolling" vol,you made a decent initial trade,cant second guess yourself on that one.

What I really dont like is the 35 day roll to pick up .53.. What does that do for you??
If your fundamental view hasnt changed why not let the chips fall where they may and if you get assigned,you are long at 91.9( as opposed to 104) or if it rallies,your initial 9/16 put may go out worthless.. Now,you have 93% of the downside risk for an additional 35 days,and no upside if you are dead right and the stock goes above 97.5..All for .53
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When it went to 86, I panicked as it was the 52-wk low. And if it falls further and I got assigned early, I didn’t like that. I thought I was buying myself sometimes to think it through
 
What's wrong with getting assigned ??

As a long term "value" investor,I would think you would love buying stocks at a discount...

You think Buffet sell puts to collect premium??

I don't think you fully understand that once your put is ITM,you have all the downside risk and no upside above the short strike.You are effectively short that call..

Had you bought the stock at 104,what would you be doing??

I already know :)
 
taowave said:
What's wrong with getting assigned ??

As a long term "value" investor,I would think you would love buying stocks at a discount...

You think Buffet sell puts to collect premium??

I don't think you fully understand that once your put is ITM,you have all the downside risk and no upside above the short strike.You are effectively short that call..

Had you bought the stock at 104,what would you be doing??

I already know :)
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I just couldn’t stomach forking out ~20K to sit on a stock that might take a while to recover. I still have a few others long positions that are also in the reds. It’s too much to bear, not necessarily rational. Buffet certainly has more money than me to spare !-)
But now that I’ve got some pointers from all of you, I just need to keep my conviction that the stock will get better and let the chips fall where they may! I may come back and ask some more options questions to learn first before trading, so thank you in advance for your tolerance of my stupid questions.
 
TheDawn said:
As long as you are able to sell calls with strikes above the purchase price of your shares, you won't incur losses when and if you get assigned on your short calls.
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This post is a strategy for being whipped sawed . It assumes that the assigned stock goes back from being a major loss to being profitable. as a covered write.
The OP is not a trader
 
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taowave said:
Aren't you writing cash secured puts,tying up capital??

Sounds to me like you should have done a 1 lot if being dow 7- 8 percent has you scrambling..

Your big mistake was the roll...
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If I was deeper in the money, would you suggest a roll or a roll is never an advisable trade? Or should I ask, when is it appropriate to do a roll?
 
If the trade is a great trade on its own,I would do it..I don't believe in option repair..It's a myth at best..

The roll you did is short Vega.
If you must roll,sell calenders when vol is high,or when there is a significant disparity in implied vol between the shorted dated vs longer dated( longer being higher).

I don't quite get your aversion to being put the stock...Odd mentality for a long term investor..
 
taowave said:
I don't quite get your aversion to being put the stock...Odd mentality for a long term investor..
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It's simply an opportunity cost issue. Why get put the stock at $91 when I can buy the stock for $86 in the market? Every single dollar counts.
 
Rookie Mistake..
How and when is he going to get long at 86 by taking in .53 for 35 day rolls??
You aren't suggesting selling cheap(iV) calls as well??

Option repair is a complete bullshit myth...

Hes bullish,doesnt know options and if hes dead right hes short the embedded call...

Hes a fundamental investor who for some reason rolled at the bottom while learnings Options 101 from the option repair squad





TheDawn said:
It's simply an opportunity cost issue. Why get put the stock at $91 when I can buy the stock for $86 in the market? Every single dollar counts.
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