Hi everyone! I'm relatively new to selling options – I have sold 7-8 puts and have not got assigned as of yet, but this NVDA trade is expiring in a few days (Friday, Sept 27th) and I need some advice as to what to do.
- SOLD A PUT OPTION (1 contract) NVDA Sep27 $117 Strike. Transaction initiated Aug 21st.
- Collected premium of $511 USD ($5.11)
- As of today (Mon Sept 23) I can close out the position for $252 USD ($2.52)
- My break even would be approx $112/share – I'm bullish and want to own NVDA long term but I realized during these 30 days that I would like to get in under $100. So yes I'm over that threshold but I'm flex on that (ie I have more than enough cash to acquire the shares) based on the advice here.
I have never rolled out a position before, so I have a few questions/notes:
- How does one decide on rolling down and out vs just closing the position?
- I'm right around 50% profitability – but I've normally closed out my positions at 90% thus far – so should I wait until near the end of the week?
- Time decay – I'm trying to understand this concept – but as I understand it, the closer the sold option gets to the expiry – the cheaper it gets to buy/close out (ie increasing my profitability). Is this correct and if so, why don't wait til very close to expiration? (but I think read on Tastylive that the generally the ideal time to hold an option is 21 days) – hence my confusion.
Thanks in advance to all you experts for taking the time to read and educate 🙂
Looking for Advice: Sold PUT NVDA Sep27'24 $117 Strike
byu/mstar18 inoptions
Posted by mstar18
4 Comments
these are fundamental questions.
1&2. Rolling is just a fancy way of closing and opening a new position. the decision is risk tolerance. where do you see the price going? use this to decide to roll or just close.
3. yes theta runs in your favor as long as it doesn’t go ITM.
Rolling for a credit makes sense here if you’re bullish and want to own NVDA long term. You could roll out to January 2025 $100 strike and likely collect a decent premium. This [Investopedia article on rolling options](https://www.investopedia.com/terms/r/rolling.asp) might help. Also, remember that options trading is risky, so make sure you understand the potential for loss.
If you’re truly bullish on the stock, I’d recommend seeing how the market plays out — you’re barely ITM.
Personally I’d close out on Friday afternoon for intrinsic value OR roll if the stock takes a downward turn this week.
I got burned BAD by NVDA taking assignment on a $120 PUT that closed at $119.67, then dropped off a cliff the day after Labor Day. I lost $1,500 and had to claw my way out of a hole.
Close Wed or if its ITM take assignment and wheel it and make more $ considering your CB is < $112 if assigned.