#ShortStrangles – If there’s one thing I’ve learned this year (it’s lead to my 3 biggest losers of 2017) is to not chase short puts up on a rising stock too aggressively. A massive whipsaw can ensue leading to chaos. OK…maybe that’s a little dramatic but…making a big adjustment, limiting downside risk, and settling in for the long haul of selling weeklies to get back to at least even.
Rolled AAOI JAN 19 2018 80.0 Puts to JAN 18 2019 80.0 Puts @ 5.17 credit
Bought AAOI JAN 18 2019 20.0 Puts @ 3.20
Pocketing nearly 2 bucks on the roll/protection. Now…I’m limited to a 60 point loss and I’m free to sell non-aggressive weeklies without worry of max loss (bankruptcy?…don’t trust these types of places)
So far I’ve accumulated 25.40 in premium to this point so still 34.60 in the hole if it goes to zero (less than that if it recovers over the next year). Using the 34.60 as max loss and 58 weeks to I’ll be looking to sell about 60 cents a week. It’s a long haul but worth it to turn around a loser if I can.
BTW…TDA margin is 975 on 3 contracts to hold this trade so not a big deal..