The buyer/owner of a call can "call away" the underlying FROM the seller/writer. The buyer/owner of a put can "put" the underlying TO the seller/writer. Somebody who's short needs to buy the underlying to close out, so selling the put is what he wants. 1) If market goes down, below the strike, then he's in the black; even if he gets assigned the underlying, that's exactly what he wants, and now he's got a lower basis, winning trade. 2) If market moves down a bit, ranges, or goes up slower than the received premium, then that's good, and he can do it again (if using the shorter expirations). 3) If market moves up too fast, then he's lost more. That's what Tom cautioned: "What you need is a reasonable expectation that you can raise that strike/cash faster than the market can raise it's mark, week after week after week (without fail). So! You need 12pts. What has the market average been?"
You sell puts betting that ES is heading higher. Essentially, this will offset the risk of OP's short position. If ES does go up, then the puts will expire worthless and he makes money. If it goes down, he's safe since he holds the underlying. But I wish it were this easy. It's not.
close the trade now and start fresh... well actually based on your action of entering a trade without exit, don't even start again lol....invest in QQQ long term. there is no such thing as 'option your way out of this'.... why does the current position even matter? if there is profit to be made by options then that would be a trade by itself, unrelated to the on-hand position. really at this point any suggestions are just crap shoots 50/50 at best... but usually people screw up more when they panic, which OP is.... so the best thing to do is to close right away.
There is a little underlying battle here, between "Sunk costs are sunk." and the recognition of the full implications of an existing position, no matter how shitty it appears from first look. "Sunk costs are sunk" is a *powerful* economic maxim that reflects once a decision is made and money is spent, it is only your going-forward considerations -- capital and probability effects -- that matter. But at the same time, you don't, for example, ignore *salvage* value. [!!] In this case, the fact that the short at $3022 turned bad does NOT matter. -$55 sucks! For sure! But the only thing that matters now is where that leaves you: you ARE $55 down. That's a fact. BUT ANOTHER FACT is that you now have an ability to sell a covered put (or a bunch of them), with your only danger being....... Whether your 100% guaranteed ability to bring in premium is beaten by the market's ability to create new loss beyond your current position. Can your rate of premium-writing beat the expected market movement? If the market had just sunk 3%-5%-8%, and had plenty of cusp-rich considerations in front of us -- any of which could jack the market by multiple percentages up or down -- then recommending the selling of puts against a short position may not win many fans. But given that we're breaching all-time highs, that economic fundamentals have edged away from "stall" indications, that we're nearing the end of a controlled-but-positive earnings season........ We should be hearing from The V-Man about "The SPX has topped at ________" thread again.
Though it will be of no help in this particular instance, let me reiterate what the insufferable McNeil said. He said , "Never short a market because you think it is too high." And to that I'll add that a market that is too high is more likely to go higher than it is to go down!
That would be too easy. And the best ummm option. Make many more of those trades and they will have cheap wine on hand for years to come.