I have a commitment to always post when I have a red trade. My current dilemma is QCOM. I have been pretty aggressive on QCOM because of the chip shortage and 5g roll out. I sold $135 puts for 5/21 which have been as much as $10 in the money and I sold them for $2 (Ouch). When a trade goes
Rajaah
on you how you handle it is a big part of long term success and there is no set answer. Sometimes a cut and run is the best choice, sometimes patience, sometimes doubling down, sometimes selling covered calls. Losses need to be managed, never take giving up capital lightly.
Right now I'm considering:
1. Wait till friday and take the shares
2. Closing the puts now and purchase the shares. The puts are now at a delta of .93 which means I can swap the options for shares without paying anything more than intrinsic value.
3. I could delay taking the shares by rolling the contract out to late June plus lower the strike to $130 from the $135. This would be an even trade both options pricing around $6.00.
4. Close the trade at the loss
Option 3 is probably my best statistical chance of recovering the loss but it takes a while, if the shares fall into the low to mid $120s then I'd probably be caught for several more monthly rolls trying to wiggle my way out.
If I'm sufficiently bullish option 2 could have me out at even or better if we get any kind of strong rally in the nasdaq in the next week or two. I could just set a limit sell at my BE or I could wait for rally then sell covered calls to improve my cost basis and do that for a couple months.
The current market concern is that Apple will at some point later this decade make its own modems and significantly eating into QCOMs business. This is a tough call I don't think it's a particularly easy task to just displace QCOM but apple has shown before its commitment to taking greater control over critical components. I felt QCOm would have a strong qtr and they did with the stock popping into the mid 140s but the tech weakness and apple news had that pop quickly fade.
