Rolling down sold puts????

Discussion in 'Options' started by droid17, Oct 2, 2009.

  1. droid17

    droid17

    Hi all :)

    I sold 70 DRYS Oct $7.00 puts for .60. They are now .90. The Oct $6 puts are now .30. Is it a good idea to buy back the $7 puts and turn around and sell 70 of the $6 puts basically breaking even. If it is put to me I get to buy at $6 instead of $6.40.


    Thanks,

    droid
     
  2. Got to ask yourself what is your current market view.

    Still bullish ? Somehow bullish ? Bearish ?

    Never let your current position affect your thinking.

    The position you choose should reflect your view.

    So nobody can answer your question but yourself.



    ** From my personal experence, closing you position all right
    is usually the bey way to go.
     
  3. erol

    erol

    Cboe has a course that teaches this. I couldn't help but think that the broker is in on it. While it's tempting to roll down up in out... I remember the quote "bulls make money, bears make money, but pigs get slaughtered."

    if you can do this [/I] consistently then all the power to you
     
  4. what if the $6 puts go from .30 to 1.00?
     
  5. DRYS is shit. I would never have sold puts on that trash.


    That is why you should not sell premium just because IV looks juicy. You should really look at the underlying.

    Never go short puts on an underlying that you are not willing to buy.


    I sell short puts but only on something I want at a fixed price in the future.
     
  6. Isn't the golden rule of put selling - only sell what you want to buy??
     
  7. droid17

    droid17

    Thanks for the replies. I should of mentioned that I am long DRYS and was willing to buy when I initially sold the puts. So I have answered my own question. Yes I would rather buy at 6$ then 6.40.


    Thanks,

    droid
     
  8. If your game plan is OK with owning more shares of DRYS, consider the possibility of rolling your Oct 7 puts down and out to the Nov 6's. That will have a potential net gain of 35 cts if they expire versus buying add'l shares at $5.65

    And depending on your current share cost basis, you might consider a covered call spread to give you an extra buck to the upside (if strikes $1 apart), assuming that you're looking for current upside trading gain rather than an investor's hope for long term price appreciation.
     
  9. droid17

    droid17

    Thanks for the ideas spindr0!

    I will check in to that covered call spread and the roll down out to the Nov 6s.

    Thanks,

    droid
     
  10. gobar

    gobar

    y not sell puts?

    look @ AAPL 210 put option which is trading at .15.

    99% sure apple will not go above 200 by oct 16.

    can i just sell it and collect the premium?
     
    #10     Oct 3, 2009