There are times when trades go against us. There are a number of things that can be done to manage the positions. One strategy that I sometimes use is when the share price drops well below the strike price of a put I’m holding is to sell a put near the price to where the share price has dropped to. I do this if I feel the share price has somewhat stabilized.
One example of that is my position with BYND that I was holding this week. I knew going into this put that it was a higher than usual risk. At the end of last week I was holding a $1.50 put that was expiring this week (10/17). On Monday morning of this week the share price dropped significantly from around $2 a share to about $1 a share. By the end of the week the share price ended up at $0.65 a share. At this level it wasn’t practical to try and roll it so I’m letting the put get assigned. I knew that this was a risk, but it was a much smaller position than I normally take.
So on Monday I’ll start by selling a call at a strike price of $1.50. I’ll probably have to go out further than just 11 days to get any premium, but I think there is a chance that the price would recover to above $1.50 eventually. In the meantime I can be collecting premium on calls.
Another move I’m thinking of making on Monday is to sell a put at a $0.50 strike price. This will be dependent on where the share price is on Monday morning. If the price does drop below $0.50 and I get assigned I’ll own the 200 shares at an average price of $1 a share. There is a higher chance that the share price will rise to at least $1 and I can sell the shares at least at breakeven on the average price I bought them for. Plus I’ll still get to keep the premiums from selling the options.
Week 25 Results
Here are the positions I started the week off with:
I started the week off with both TMC and AMPX looking good for hopefully expiring on Friday. BYND started the week off with a huge drop as I mentioned earlier in the article. I opened a new position on Monday by selling a put on TSLL with a strike price of $17.50 and expiration of 10/24 (11 DTE). For this trade I collected a premium of $112. I chose TSLL because even though it had recently made a big run up in the share price it had seemed to be stabilized at least for now.
By Friday morning AMPX was just a little above my strike price, but I decided to leave it and if the price dropped below my strike I was okay with letting it get assigned. At this point in time it’s hard to say if it will get assigned. The share price at market close was $11.84, but the share price rose above my strike price in after hours trading.
Here is a list of my trades since the beginning of September:
Summary
For week 25 I collected a total of $111.96 after the fee. My target for week 25 is $82.76. Total premiums collected for the first 25 weeks is $2,095.16 and my target for the first 25 weeks is $1,905.20. Here is a screenshot of our end of week positions, the growth chart over the 25 weeks as well as a chart of our weekly summary:
