Hello, Apratim! Thanks for posting your option considerations. You were thinking of selling Feb 85 puts and covering them with Feb 70s or selling the May 85s naked. Either one looks good to me, altho I'd be more likely to sell the 5/75s. About naked puts, here's the advantage of the short side:
I sold 15 MSPG 12/70Ps @ $4 = $5,959 two weeks ago. Bad decision.
Yesterday, bot them back for $16,166, lost $10,207
Simultaneously sold April 60s: $18,895
Gained $2,729 & lowered the strike by 10
Also reduced maintenance requirement a bunch
In a pinch I can roll Aprils to July for more premies!
Naked near term puts can be rolled both out and down, repeatedly.
Only a drastic market drop will threaten the seller.
Suppose I'd bot CALLS: Adios $5,959!
There's a maneuver to roll calls but it won't work if the stock drops suddenly in the last weeks before expiration.
Remember the immortal phrase from Professional Put Peddler Practices:
"I'll pay you less, later ... if you'll pay me more now."
Good to hear from you, Apratim, Best wishes and Good Evening!
Don Martini
PS: I've been out of town several days, unable to respond, sorry for this lateness. |
