Confusing title? Let me explain:
On 5th March i sold a put option on V.F. Corporation (VFC) for 1.05 $. 40 days later i had to buy it back for 5.25 $. That was a loss of 420 $. Well, in hindsight March was not the perfect time to sell this option but none of us have a crystal ball.
Now one can accept the loss or figure something out. I did the second.
So i again sold a put with a lower strike for 5.15 $. But VFC was not nice, the price has fallen further – and i had to buy it back for 5.9 $. Again a loss – this time 75 $.
Once again i sold a put with a lower strike. This time for 5.2 $. Today i bought it back for 0.1 $. That was a 510 $ win.
What i mean in this article is that if you choose a good stock, even if it temporarily goes down, in the end you will mostly reduce your initial loss by rolling your options forward and down.