Selling Puts? What To Do When Your Trade Goes To Sh*t

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The video discusses strategies for managing put options that have moved against the trader. When a put option on SPY, sold at a $771 strike with a premium of $10.84, drops below the strike price, it becomes in-the-money. The analysis suggests that if the thesis remains intact and the effective cost basis of $760.16 is acceptable for owning the underlying asset, assignment might be a viable option. Alternatively, rolling the put to a lower strike price ($754) and a later expiration date (Oct 2nd) to receive additional premium is presented as a strategy to give the trade more time and room to work. The video emphasizes a rule to only roll profitable trades, and if the trade is already losing money and the thesis is broken, closing the position and moving on is recommended. The analysis highlights the importance of using a structured approach based on data and predefined rules rather than emotional decisions, emphasizing that knowing one's thesis, breakeven point, and limits is crucial for effective trade management.

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