Holding this contract until expiration realized a loss of -$12 per contract. This could been avoided by sticking to the “Get out at 50%” rule, in which case it could have been closed for +$118 profit per contract.
Here’s the backtest for both scenarios:
- Sold March26’21 Cash Secured Put PLTR $25 @2.35 on 2021-02-16
- Bought March26’21 Put PLTR $25 @2.47 on expiration
- Loss -$12 per contract
- DTE 38, hold until expiration
- ROI -0.53%
Holding till expiration resulted on a $12 loss per contract:
However, if we get out at 50% to manage risk (since day 1), results on +$118 profit per contract after only 9 days.
And getting out at 50% 21DTE results on +$118 profit per contract as well:
Lesson: Manage your risk and winners.