$100K Account: Rolling MSTX Mar 28 $33 Put to Apr 4 $32 Put for $115 Credit

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An adjustment was made to an existing position in a $100,000 account by rolling one (MSTX) March 28 $33 put to the April 4 $32 put, receiving an additional credit of $115.

Trade Details:

  • Underlying Asset: MSTX
  • Trade Date: March 27, 2025
  • Original Position: Sold March 28, 2025, $33 Put
  • New Position: Sold April 4, 2025, $32 Put
  • Additional Credit Received: $115
  • Total Credit Collected: $196 ($81 from the original trade + $115 from rolling)
  • Account Size: $100,000

Rationale for Rolling:

Rolling this put option adjusted the strike price downward while collecting an additional premium. This move helped improve trade positioning and risk management by:

  • Reducing Assignment Risk: Lowering the strike price from $33 to $32 decreases the potential capital required if assigned.
  • Collecting More Premium: The additional $115 credit further reduces the effective cost basis if assignment occurs.
  • Adjusting to Market Conditions: MSTX’s price movement and volatility levels presented an opportunity to improve the trade setup.

Trade Outcome Scenarios:

  1. Stock Price Above $32 at April 4 Expiration: The put option expires worthless, and the full $196 credit is retained as profit.
  2. Stock Price Below $32 at Expiration: The position may be assigned, requiring the purchase of 100 shares at $32. Factoring in the $196 total premium, the effective purchase price would be $30.04 per share. However, the plan is to continue rolling the position forward to collect more credit and avoid assignment until the option eventually expires worthless.

Risk Management:

  • Strike Price Adjustment: Rolling down to $32 reduces downside exposure compared to the original $33 put.
  • Capital Allocation: The trade remains well within the risk limits of a $100K account.
  • Exit Strategy: Further rolling or early closure will be considered if market conditions shift.

Conclusion:

This roll effectively improves the trade’s risk-reward balance, reducing the strike price while increasing premium income. The strategy remains focused on continuing to roll the position until it expires worthless.

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