Late this week an investor who is a FullyInformed.com member wrote me looking for some ideas on how to repair his in-the-money credit put spread trade in 3M Company Stock (MMM) which expires today (March 29 2018).
I have 2 MMM credit put spread at 237.5 and 225 expiring this week both are in the money how would you roll it out. the 240/220 1/18/2019 spread will give me 11.55 if i sell 3 it will give me good income but its way out of the money now and i am taking on so much more risk do you see a better way?
Three Repair Ideas
I don’t like going out to January 2019 to try to repair the trade. I think as Dave does, that it is too far out in time and a lot can happen to this trade. Instead I have three ideas that are easy to implement and can repair the trade and get profits back into his portfolio.
All 3 ideas will allow him to work the trade to keep generating income while waiting for the stock to recover or stabilize. Whatever happens to the stock as long as Dave stays on top of the trade and any adjustments needed, profits should still be generated despite being in-the-money with his short put options.
This repair strategy article is for FullyInformed Members.
Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk.