With the market futures pointing to a bleak and steep decline on Monday at the open, for those investors holding short put options without the protection of a credit put spread, there are some ways to still try to bring profits in and reduce exposure to the market collapse.
When a short put is hold naked it means there is no protection against a decline in the stock. Therefore as the stock collapses, the cost to buy back and close the short put grows quickly. Often a put that was sold for 50 or 60 cents can cost many dollars to buy back and close. Here are some tips for those investors who are holding naked put positions as the market prepares to open a lot lower on Monday morning.
This strategy article for members present 6 methods for rolling put options that have been caught in-the-money in a downturn.
This strategy article is 1300 words in length and will need 3 pages if printed.
The rest of this strategy article is for FullyInformed Members.
6 Tips For Rolling Deep In-The-Money Short Put Options In A Market Collapse – Mar 9 2020
Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk. Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed and presented are financial or trading advice or recommendations. Everything presented and discussed are the author’s own trade ideas and opinions which the author may or may not enter into. The author assumes no liability for topics, ideas, errors, omissions, content and external links and trades done or not done. The author may or may not enter the trades mentioned. Some positions in mentioned stocks may already be held or are being adjusted.