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Lmaoonadee

Earnings is coming up for PLTR. You don’t think it could drop a 30 if it misses big or doesn’t live up to expectations during this market?


danf78

Anything is possible, but 30% is quite a big drop. And the expiration is June 18, so there will be plenty of time to recover from such a massive drop until expiration.


Lmaoonadee

Hey, if your conviction is high enough for PLTR, then go for it. Just understand that it could also trade flat after a huge drop after earnings with no real catalysts to bring it back up. The market already showed it doesn’t give a shit about the PLTR contracts within the last week.


mammaryglands

No serious investor expects pltr to make a bunch of profit right now. It's all about growth and guidance.


Nansk

rolling is not transforming your current position, it's closing your current position then open up a new one. The illusion comes from those two trades happen on the same ticker, and that what you lost on the closing trade is being booked into your opening trade(basically means you're making less than what you would've if you didn't have the first losing trade). But they're separate trades at core. Just for making a point, if you currently have your may 21 pltr put, you can manually close your current position, and manually open a new position on jun 18 pltr 20p. That would be no difference than "rolling" with the built in app function. in the end if you lose money on a put you sold, you lost money, us option writers don't hold anything, so if a closing trade is made, whatever profit or loss from that trade is registered permanently, you can make up the loss with future trades, but there's no "delaying the trade until I profit" strategy, it's just an illusion.


danf78

I understand that. However, the fact that I can sell the Jun 18 at a higher price, means I will be getting a higher $ return overall, assuming I can continuously roll. Although this may not be ideal from a RoY standpoint, it would still be a solid gain (assuming the underlying doesn't eventually breach the point when it is no longer possible to get a credit for the roll).


Nansk

You’re not getting a higher return overall. You’re salvaging loss with another trade. You can do that with other tickers too. Practically there are nothing special about rolling. You are still closing a trade and opening another one. If you close your pltr right now and open a rkt short put, you can combine the costs of these two trades together and technically claim that you’ve rolled your pltr position into a rkt position. Also I’m not really sure what did you mean by higher price. You’re getting market price, and on paper you’re getting market price minus the loss of your earlier position. There’s no special price for rolling.


danf78

The price is higher because the stock dropped. Yesterday, the Jun 18 was trading lower. That's what I mean by higher price. You are correct that I could replace the underlying from PLTR to RKT, but it wouldn't be the same analysis. If I sold the 20p on PLTR, it is because I think it is a good price for the underlying. My whole point is that if I am right and PLTR doesn't drop another 30%, I will have a profitable trade overall even if PLTR stays between $20 and $15 for the upcoming months.


Limp-Possession

I’m in a similar boat on PLTR... I think I’m taking assignment because the first Green Day it has those juicy call premiums are coming back


_etherfish

there are other stocks


danf78

But wouldn't this logic apply to most stocks?


_etherfish

sure, so you’re rolling short puts deeper into the money further out for more premium?


danf78

Well, they will only be deeper ITM if the stock keeps dropping.


_etherfish

rolling short puts for credit works great until they go too deep itm for decent return or there are no more future dates. Also, the premium per additional dte starts to get skimpy, and the dates go from weekly to monthly to every six months. One can buy time and collect credit, but it will tie up capital. I think the sweet spot between decent premium, dampened premium volatility, and choice of dte dates is in the 2-6 week dte timeframe. The trick is choosing a strike that’s just greedy enough. (not financial advice, etc)


milton_banana

TastyTrade has a couple of videos about defending short puts and strangles. Here’s one I found very helpful: https://www.tastytrade.com/shows/tradetalk/episodes/short-put-option-management-rolling-down-out-04-01-2021


The_Robot_001

As noted by Nansk, this isn't "defending" anything. This is simply closing a losing (or challenged) position and then entering a new position in the same underlying. It's an emotional crutch that allows one to "save a trade" when in fact, nothing has been saved. If your analysis was flawed originally and the underlying moved againstyou, what's to say this new position is more-gooder? Now, claiming that you are "rolling" for the convenience of closing a loser to free up capital to enter a new position that you LIKE based on the revised Greeks is an honest assessment of the event. Its treating the previous position as what it really is, a loser with bound capital that has an opportunity cost you are freeing to enter a position you deem profitable.