Week 9: The Defense – Rolling & BTC

You are in a trade. The market turns against you. The enemy is at the gates. Do you panic? No. You deploy countermeasures.

1. The “50% Rule” (Winning)

First, let’s talk about winning.

• Greed kills Snipers.
• If you sell an option for $1.00, and two days later it is trading for $0.50, you have made 50% of your max profit.
• The Rule: BUY TO CLOSE (BTC) at 50% profit.
• Take the money off the table. Free up your buying power. Find the next trade. Don’t wait for the last penny.

2. The “Roll” (Losing)

If the price challenges your strike (the stock drops to your Put level), we “Roll” the position.

The Maneuver:

1. Buy to Close your current losing position.
2. Sell to Open a new position for next week (giving yourself more time).
3. Net Result: You usually collect more credit for doing this.

You are essentially saying: “Okay, you beat me this week. I bet you can’t beat me next week.” You are buying time using the market’s own money.

3. The Stop Loss

If the thesis is broken (the Monthly chart turns Red), we do not roll. We accept defeat.

• Max Loss Rule: If the trade reaches 2x the credit received, we close it.
• We live to fight another day.