LogFAQs > #951936176

Sunroof posted...

Whats usually better, putting an expiry date one month out -or- putting an expiry date one week out four times?

There is no sure-fire way to this. I believe weeklies has the most profit potential but also the most likely to get assigned. 45 days is the sweet spot i've heard but i generally go for 2-4 weeks personally.

Sunroof posted...

Additionally, lets see I did a sell put and like a day away from the expiry date I realize the stock is way lower than my strike price. Can I cheat code again and buy back the option to eliminate that loss?

Yes this is called rolling. Rolling down with puts is amazing and reduces your risk so much more than puts already does.

You aren't cheat coding though, you are just trading away time. Here is a continuation of the put scenario above i mentioned it:

Scenario E: Stock goes way down to $90
-Put expires and you get assigned
-You now have 100 shares worth $9,000 and $1,000
-You technically broke even here. You just lost time
-Alternate: You can roll your position here. I will go over this another time.

-You decide to instead roll your position
-You buy back your put which is worth $5.5 per share for $550. You now have $9,950
-You sell another put two weeks out at the $92 strike for $7 per share for $700. You now have $10,650

As you can see you bought yourself two more weeks and earned more premium doing it. Additionally if in two weeks the stock is still at $90 you could then roll it down again to $89 or something and earn more premium doing it. The only risk is if the stock drops way faster than you can roll it (which is a risk for any of these methods tbh) or if volitality dries up. But if you are ok owning the shares (which you should be) these aren't really a problem

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DPOblivion beat us all.