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Took out a loan to sell uncovered puts, now the underlying is crashing and it could be crashing way further
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Its a very small oil company overseas, they have tons of potential but they're not producing as much as they could because of bureaucracy and other problems that might be solved in a month and unlock tons of value, what should I do? I have 3k puts sold on 16.10, another 3k puts sold on 16.60, the stock is at 16.23, it could go down to 11.80, somewhere around that, what do I do to protect myself? I'm thinking of buying some 15.50 puts with like 1/3 of the capital I earned from selling these puts, then rolling next month, I need 10k to pay out the loan, I would like to pay 20k to decrease interest, I got 35k selling the puts, so I could use 20 for the loan, 10k to buy the hedging puts, 5k to help me purchase the puts near expiration date, then I could roll the puts to January and take out more premium, but I need 10k extra for the loan as I said, I need to be able to take out more premium, and I might have enough margin. What would you do in my place, I know I'm in a complicated situation, but I had to take out the loan, I was profiting 5 to 10% every month selling puts but my income isn't enough, I had some medical situations, anyway, enough explaining, can someone give me a good tip to not crash if the stock crashes? I can't sell anything more, I'm already tapped out margin-wise.

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You got 35k for taking the risk of 9.8m dollars in shares if assigned Idk how you think you can hedge that

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Yes buy them back. There’s no theta* to destroy if your puts go 5.00 ITM Are you prepared to take assignment of 600,000 shares?

Also the more ITM you go and the closer to expiry, the more likely that someone will exercise early. And then you’re not in a good place. Take the L man

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3 days ago