I sold cash secured put options (12.5 strike for Nov) and got burned really badly (was down -200+%, now -100%, break even is 11.85). These options have little time value left (5 cents). I'm neutral to bullish on ATVI. I think a target price of $12.50 for this year and $14.50 for next year. Is it better idea to take delivery or roll them out 2 months later with a better chance for them to expire worthless?
I'm thinking of waiting 2 weeks to around expiration, if it is in low 11s, to take delivery and then sell $11 puts and leverage up (2x), or if near $12.50, to roll November short puts out 2 months forward and collect a 40 cent premium.
Fortunately I had planned for such an extreme scenario. When the puts went deep ITM I executed my plan B and sold another batch of 11 puts for 0.45, bringing net cost to 11.40 with a 2x position.
I intend to take delivery. I very much doubt that 11.40 will be a top so I'm pretty confident I can take in the stock, sell at break-even, and establish a new short put position at that price point. ATVI may not be going anywhere fast but it certainly ain't gonna go down crashing.