(05-16-2020, 05:49 PM)fenders53 Wrote: And here is another trick that you might find handy at very specific times.....
You are assigned stock XYZ and it's say $26 and you are in at $28 basis. The short-term story changed and you are down some and you are now very bearish on the stock. The closest call is at $30. 15%+ out of the money and the premium is very weak. You immediately sell the shares and then sell a put at $25 which has a good premium as it's close to the money. You now have some downside protection without bailing on the stock and conceding the loss. I did this quite a few times in early MAR when the virus hit. It was pretty clear which stocks were heading lower. This is NOT something I do with my core DGI holdings. Just the income game stocks, which I own very few of in this economy.
I'm not following this Fenders.
Put stock @28, now trading @26. Sell the shares? Trade over, a loser.
Sell a new put @25? New trade. May be a winner or a loser. Irrelevant to the earlier put that was assigned.
I have a couple of friends who do significant amount of "defending" a trade. Rolling down and out etc. There are no repairs to be made. Each trade stands alone, the only connection is the ticker symbol.
I want to be clear, Rolling locks in a loss on original trade and places a new trade on the same underlying, there is no repairing of the earlier position.