I'm new to options trading.
I have a cash secured puts on a stock that tanked due to the Iran war. I have faith it will recover after the crisis is over so I rolled it down and out. I'm still getting net credit that is okay for me.
The main risks I'm aware of
- I have my capital tied up and lose out on other trading opportunities (I'm not worried as I have large income and don't plan to retire soon)
- Stock will never recover or will company will bankrupt (I know this is probably the biggest risk)
Any other major risks I'm missing?
Posted by anttoekneee69
1 Comment
rolling for credit feels good but you’re basically turning a short-term trade into a longer-term commitment, that’s the hidden risk most people miss. you’re also increasing exposure if the thesis is wrong, small loss can quietly become a big one over multiple rolls, another one is volatility crush, you might collect premium now but if IV drops hard, future rolls won’t pay as well. assignment risk isn’t bad if you actually want the stock, but if you’re just “hoping it recovers” that’s where people get stuck holding something they didn’t truly want. tbh the biggest filter is simple, would you be fully okay owning this at your effective cost basis even if it goes sideways for a year or two
if the answer isn’t a clear yes, rolling is just delaying a decision, not improving it