Sold New DIA Puts

With the markets taking another dive today I bought my original naked puts back for a profit this morning since I expected the fall to continue through the day and now that it’s down deeper I decided to get back in at a lower strike.  I do not claim this is a bottom, but do think I am making a fairly safe trade since I own two December 84 puts which will stop my losses if DIA falls deeper than $75.00 before November options expiration. 

While DIA was trading at $86.19 my limit order hit and I sold to open two DIA November 75 puts (DIJWW) for $2.10 each and received $408.50 after commissions.  The only way these puts come into play is for DIA to fall below $75.00 before at expiration which would make more DIA December puts a profitable trade.  Ideally DIA closes at November expiration close to $75, but above it.  This would allow me to take a full profit and let me write new puts for December expiration, still with the protection of my December 84 puts.  A more profitable trade could have been to trade at a higher strike, but that would give up too much of my hedge I like to have in times like this when we’re heading back down to retest the lows of earlier in the month.