I was considering that exact same roll, but am still holding off for now. Do you have any guidelines that you follow for rolling naked/cash secured puts? I know we have collectively figured out rules for BPS rolling but I'm curious about your thinking about naked put rolling.
I'm still figuring out my guidelines / rules for naked puts.
This is what I've figured out right now. That particular roll is to a strike and expiration where I expect, at this moment, I will take assignment should it be ITM at expiration. My idea/plan is to convert naked puts to shares roughly every $50 down starting at $800. In that spirit I also have a naked put at $790 strike this Friday that I plan (right now) to take assignment on.
For this particular instance, I was also taking the available roll to set up the next week assignment should that opportunity arise. Part of the dynamic that I'm still working out is to have decided in advance what strikes I want to take assignment, and then to have options with that expiration ready in advance. I don't want to arrive at the 750 strike price and then try to get assignment the next week. Of course I could just do the equivalent buy or sell of the shares outside of assignment - I'll also be considering that
The remaining puts though are the money makers. Those are also 790s for this week right now that I will be aggressive with. That aggression arises because the share price is relatively low (it can always go lower). If the share price were $1200 then these puts would be relatively conservative.
The general idea with the money makers is a reasonably good chance of OTM at expiration, though dramatically higher than the put spreads I've been doing. If these are ITM and rolling then the rolls will be more of a split between credit and strike improvement.
I've also got CC in the account I'm all-in on this approach, with. They are also pretty aggressive, though not quite as aggressive (share price relatively low - less aggression with the cc). With shares at low 800s I went for the 830 strike. Still high premium ($12 against my $2 minimal income standard) but some room to roll up with a big shift up should we see that.
Its the combo of puts and calls I focus on. For example if Friday arrives and the share price is $700, then the puts probably won't have much of a roll available besides time and minimal credit (no strike improvement). If I'm also opening $12 calls then that's probably a good time to spend the extra $10 on strike improvement for 1 or more puts, rather than mentally banking it.
Alternatively if Friday arrives with a share price of 880 then those calls can probably get a good roll on their own and that week the earnings will come from the puts. At this moment I think the first strike I want to take call assignment is 950, but the idea is similar; to have strikes in mind, in advance, where I'd like to convert shares back into cash (sell high).
Underlying all of this roll logic, for both puts and calls, is the understanding that these are fully cash secured or share backed with no margin usage. All of these positions are "roll forever" capable. So if my put strikes get stuck at 750 with shares at 500 for the next 2 years (and for some reason I didn't take assignment), then I can still roll them while I wait out the recovery. I'm probably doing 1 month rolls with 1-2 weeks to expiration, or even quarterly rolls at that point
. I bought 5 shares at $796 and sold a 830p Jan 23 for $184
