As there has been so much discussion on SVM and as I was responsible for bringing up the suggestion of selling puts in this situation I thought it was only right to update anyone interested as to how my personal strategy faired at this point.
Initially I sold $7 and $8 strikes, but as the stock dropped I started selling the $6 strikes as I could see that they had much less downside in the event of an even deeper drop.
I closed both the $7 and the $8 strikes September expiry positions on the 9th September after only holding for a short time as it was getting to be obvious that there was more downside to come and both were still in profit. I made a small profit on the $8 strikes and a decent profit (over $5k) on the $7s. I then concentrated on building up my short position of $6 strikes September exp and ended up with a good number of contracts sold prices between $0.15 and $0.80 average of a little over $0.40 after commissions. Today those all expired well OTM so I have made a total (including the earlier trades) of a little over $43k in the two weeks I have been baby sitting these positions. As it turns out the $7s would have been OK but I don't like taking those positions to the wire and would have closed them or rolled them today had I not done it earlier.
I only made the big additions to the Sep $6s when it became apparent that the shorts were backing off.
It is still possible that there will be another short attack but unless there is seriously bad news I expect the stock to shrug that off. It will take time to rebuild confidence in the stock and for a while expect volatility and no huge advances. However this means that the rich premiums will continue for a while until the stock starts trading more reliably.
I have positions in the Oct month at 6, 7 & 8 strikes and some 9s & 10s in further out months (small positions) . I also place a synthetic with a 7 strike call financed by a 9 put for March.
For all out there, be careful, do not over commit but don't get too fearful either. It is the volatility that creates the high premiums so you have to be prepared to weather the ups and downs. With short puts even if the stock does not trade in the direction you wanted, there are 3 alternatives actions available to salvage the situation right up until the expiry date.
1. Let the stock be assigned. If you selected the right strike and premium it was a cheap buy.
2. Close the position while there is some profit still in it or at least only a small loss if you have really having trouble sleeping.
3. Roll the position forward by buying it back and selling a longer dated put at the same or a lower strike and gain both time and money to fight the good fight in a later month.
Profitable trading to all, The Vet....