Sold to hedge my sell call lower at 71 but ya it fell 

The Mistake: Selling a Put at the Wrong Time 🚨

On December 26, 2024, I made a big mistake when I sold a put option on PLTR at an $80 strike price for a premium of $2.48 while the stock was trading at its highs around $80. I was hoping the stock would stay above the strike price, but, unfortunately, the price dropped after the market closed, settling at $78.80.

The Consequence: Realizing the Loss 💸

By the end of the day, the price drop resulted in an unrealized loss on my sell put position. If I were to close the position, I would face a loss of around $0.37 per share.

Here’s the breakdown of the situation:

• Sell Put at $80 Strike Price: Premium of $2.48

• Price Drop to $78.80: Put option gains value as the stock price moves closer to or below the strike price.

• Unrealized Loss: The price drop meant I was facing a $2.85 loss on the option position, or a $0.37 loss per share if I chose to close the position.

The Lesson Learned: Timing Is Key ⏳

The key takeaway from this trade is the importance of timing. Selling a put at $80 when the stock is already near that price leaves very little room for error. In hindsight, I should have waited for a better entry point or avoided selling the put at that level.

Moving Forward: Avoiding Similar Mistakes ⚖️

To avoid similar mistakes in the future, I’ll focus on:

1. Striking a balance between the premium received and the risk of being assigned the stock.

2. Using technical analysis to understand whether the stock is near a support level or if the price has room to move higher before selling puts.

3. Being patient and waiting for favorable market conditions rather than trying to capture premiums at less-than-ideal times.

In conclusion, while selling puts can be a profitable strategy, I’ve learned that timing is crucial to making it work. I’ll take this experience to refine my approach and minimize the risk of similar losses in the future.