This is part two of a two-part video explaining the similarities and differences between selling IWM naked puts and bull puts on a monthly basis. Part one focused on IWM naked puts. This one focuses on IWM bull puts. The emphasis is on what to do when they move against you.
Notes
If using bull put spreads in lieu of naked puts for monthly cash flow trade where you MAINTAIN exposure… if/when stock drops to your short strike and/or pushes the bull put spread ITM. It’s dangerous to wait until expiration to roll. Rolling EARLY makes it easier to get the right credit on the next month.
Sell 35-day bull put
20 days later, stock has moved far against me, I have 15 days left.
One) You could let it ride and hope that in the next 15 days the stock rebounds and the put spread expires worthless. More aggressive
Pro: You’ll recoup the loss and potentially make money in 15 days.
Con: If the market doesn’t recover, you won’t be able to roll to the next month for a good price. It could make it so you’re unable to recoup all the loss in one month.
Two) You could roll NOW. More conservative
Pro: You’ll be able to roll for even or slight debit/credit.
Con: You’ll recoup the loss a little slower if the market recovers.
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