when figuring out wether or not to sell the position, look at what the market is doing, not your PNL. The market doesn't care that your position has lost too much or too little, it'll do what it is doing regardless of you. if liquidity is a concern then move slowly, sell a little when the market moves up. use icebergs and hidden orders to get fills without spooking the market.
Assuming current prices hold and that I'm calculating this correctly, using your strategy I would lose somewhere between -501 to -251. If I just buy 4 puts and sell 4 puts, I could at most gain 168 but I could lose -832. If I just sell now, I would lose -360. I was hoping to use options to see if I can change my risk profile and find one I like.
Take the loss, repent your sins and don't trade again until you have a trading plan. If you did have a trading plan you wouldn't be asking what should I do.
Best advice: exit the trade if you don't like it, it will clear your mind. There are always other trades. The other thing to consider is the commissions/slippage on option trades - why prolong an exit on a position you don't even like Do not entertain the idea of option spreads as a repair on an illiquid stock, the slippage/commission will eat you alive.
It's not MY strategy. I just explained what would happen if you executed the position which you wrote about on page 1. When a stock is this low and has lost nearly 1/2 its value, there's nothing you can do to repair it because the next strike up trades for cents unless you go out 6-12 months or more and even then, it's bupkus. If it was trading at higher levels, you could attempt a repiar strategy if you felt that a rebound was in your future. At approx $1.25, the stock is essentially an option. You're only hope is a big rally.
In the future avoid option trades on such low-priced stocks. Look for stocks > $20/share and volume > 1M/day. The options on these higher priced higher volume stocks are much easier to get in and out of. Stocks less than $5/share are basically penny stocks. If you have to, just buy/short them outright.