Short options
How do I manage and defend a short naked put that has breached its strike price?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
Managing a breached short put often involves choices such as rolling the strike and expiration further out for a credit, accepting assignment to own the shares, or closing the position at a loss, depending on the trader's outlook and risk tolerance.
How it works
Rolling down and out extends the trade's duration in hopes the stock recovers, but it also increases total capital at risk and extends the exposure period to further declines.
An example
A trader whose $50 put is breached by a drop to $45 might roll to a $47 put expiring a month later for a net credit, lowering the breakeven while retaining assignment risk.
Risk & limitations
Cboe materials note rolling a losing position does not eliminate the underlying risk and can compound losses if the stock continues declining.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.