Yep, 20 contracts. I have the cash to take the assignment but I won't touch it with a 10 foot pole now. P.S. My gut feel told me to close the position last Fri at a small loss but didn't act on it. Sometimes you snooze, you lose...
You made many mistakes in one mistake: never sell a put on a stock, never sell a put on a stock with negative earning, never sell naked, never sell a put on anything in a down market, never sell a put on anything in a down trend, never sell a put on a stock in one of the worst sectors in the market, etc... If you want to sell puts do it on indices only, and never sell naked unless you are too wealthy or too insane
I think that advice was a bit excessive. I sell puts all the time. You have to know what you are trying to accomplish, the risks and how to manage the trade. You can sell puts in a bear put spread. That would work better in a bear market with declining earnings. Never sell is not really a real world solution.
From your point of view it may appear excessive as you have experience, but this person just lost 7K. There is no excuse for this. No person on earth should lose this amount of money unless it is 1% to 5% of a large account. It is likely that this person does not have a 700K in his/her account. Do not you think it is too excessive to flush that sort of money in a toilet? I agree with you that I may have been tough in my note, but I really do not feel good when I see a person lose that sort of money. There are people who work a whole year to save that sort of money, and this person lose it in an unexcusable trade. Why in the world this person wrote a naked put on such a stock in a down trend, down market, worst sector, and with negative earnings, is beyond me. He reminds me a guy who once approached me to teach him. He found $1K expensive to learn, and I agreed with him in trying to minimize money. He then showed me Indy mac stock. It was around $20, or something. He wanted to sell a put (a naked one). I told him to stay away from that stock, from any one stock, and from writing a put with a small account. He disappeared few weeks, and then came back to me telling me that he lost $10K on that stock. I told him that I did not want to teach him anymore as I was so angry at him. He spent his time saving a $1K, and I laud him for that, and yet just lost a 10K on one stock which I told him he should avoid for all the reasons I said above. Yet he did it. He may have thought he was smart picking bottoms, and all of that. I do not know about you, but I feel pain just learning about people losing money they should not lose. I sympathize with this person. That is why I am too tough here. Here is the other part. Selling put means positive delta. He could have been positive delta, and at the same time GUARANTEED not to lose even a single cent (except commission)! He could have voted his bullish opinion, and be certain not to lose. What s/he lacks is just knowledge, and has the most valuable asset to a trader (the capital) which he had just lost a part of.