Is my Position Failed or Favored

I recently made an option trade that looked favorable at the time. However, in the last week the stock price has taken a dive and I have to decide which way to go. Do I hold the option and complete the sale, do I roll the option for another week, or just simply buy it out and take the loss?

Option 1 – Just hang on

If I hold through expiration I will own 400 shares at 7.00, and since I strongly believe it will rebound, then that’s ok. Secondly, I can then begin selling calls against the 400 shares creating weekly income. Looking at next week, a $7 call is paying .25/share. This would create $100 income for the following week. That’s 3.5% ROC return in capital in 14 days. Then as the stock price moves up, I move the call strike to continue collecting premium. Looks good so far.

Option 2 – Roll option to next week

Option 3 – Buy to close

After reviewing my options I’m sticking with option 1, it’s the only one that offers any kind of profit