With stocks being pummeled by the strongest market correction since January 2016, one aspect of selling put options for income is understanding the steps in rolling credit put spreads once they fall in-the-money and are at risk of stock assignment or larger losses.
While a credit put spread limits losses, there are still losses that will be taken if the trade is ended while the short side of the spread is in-the-money. If the drop is severe enough, the long side of the trade often can make enough to cover the loss on the short put side.
Rolling In-The-Money Credit Put Spreads – Strategy Article For Members
This article discusses how to roll in-the-money credit put spreads to both protect existing profits as well as earn additional profits. The example used is McDonalds Stock (MCD).
This strategy article for FullyInformed Members is 1700 words in length and will require 5 pages if printed.
Rolling In-The-Money Credit Put Spreads – Become A Better Investor – Mar 22 2018
Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk.