I don't get how you lost money with your short put. You sold a put albeit accidentally and then the underlying went up so you should've made money. How did it "move against" you? It moved for you as far I can see. If you weren't comfortable with the expiration date so far out, you could've still closed the short with a profit. Am I missing something here?? Why did you feel you had to buy that put so far out with the expiration? Now you are losing money on the long put with the farther out expiration date that you bought with a high price and with time decay unless TSLA makes a huge move i.e. Elon Musk says something stunning.
I sold the put as TSLA was going down fast, so it had open losses. The first thing I could think off is - let’s hedge it and reassess the situation later. The trades were maybe 10 minutes apart. My premise is that TSLA is going to be range bound for some time around 1000 level but still volatile. My short leg will decay faster and will either expire worthless or I will take the stock at 990 with long leg serving as protection. Although it will not really protect me enough, so it’s not desired. Once I am out of short leg, I should have enough time to sell another short put at same premium. If I hold shares I will look to sell a covered call. That should cover the cost of the long put I am holding. So at that point I should have a paid-for long put with plenty of time to expiration (lottery ticket). I will make the choice when I get there. Above is the rosy scenario. The worst case is TSLA moves too far away from 990 and I can’t get enough premium to recover original deficit. This is all quite hypothetical and I doubt it will all go smoothly. In my mind. I already booked the loss to the R&D column.
With only 10 days left till short leg expiry and TSLA doing exactly what I was hoping it would do (luck of course), I am keeping the trade open.
Without analyzing the spread thru Orats,I would GTFO and look for some fly around 1000.. Don't love 60 dollar calendars with the short .25 of the long.. I'll analyze later,maybe there is edge,but I doubt it
I’m not a volatility trader(that much is obvious), so my assumption is that all options are priced “fairly” I’m waiting for short leg to expire and re-assess the situation.
Basing the calander off the price off of a modified distribution that Orats calciulates.. Have you looked at rolling either side?