Rather than continue to mix this with the context about option chains in another thread, it seemed better to start a new thread.
[Copied from post by billb]
a) How long have you been selling puts?
b) What happens in a bear market? Have you experienced one with your current strategy?
c) What is the current method of risk management? Always accepting assignment probably works most of the time,
d)but what about a case like NFI?
a) at least 20 years. (I held a sold put through the October crash of 1987 !)
b) several. As an example, May 10 last year illustrates a bear correction start, notably how far and how fast things settle. One responds by taking losses until the remaining positions, if all are exercised against you, do not represent more debt than you are willing to carry. You sell covered calls against things as they get put to you. (Cash-covered sold puts, as mentioned in the article, do not require any selling at a loss). Notice that since August this has worked out grandly, as the market subsequently went on a sustained tear. It clearly also demonstrates that, with ‘good’ stocks, there is more money to be made from price appreciation than in options.
c) it is essential that the combined obligation, if they ALL went against you, not represent more of a burden than can be handled. The one cardinal rule is to survive to be able to resume trading after the correction.
d) there will always be a few cases that will never recover. These are rare. This is the classic example of the importance of diversification.