A couple of months ago I recommended buying a put option on Autodesk (“Autodesk on the Brink”), based on the premise the company had become overvalued and was likely to pull back from what I felt was an unsustainable price. I still feel that way, but since that article was written the share price for Autodesk (ADSK) has risen to a little under $70, thereby making the $60 put option that expires this Friday worthless unless something dramatic happens within the next few days.

That isn’t likely to happen since the company isn’t due to release its next quarterly earnings report until November 29^th, and hasn’t issued any other sort of press release in nearly month so there isn’t much going on at the moment to motivate current shareholders to start dumping their stock en masse (but never say never, since IBM reports its quarterly earnings this evening which will temporarily turn the media spotlight on the entire tech sector).

Assuming the ADSK put option does expire worthless at the end of this week, you have two choices: Take the loss and move on to the next opportunity, or roll this trade forward beyond the 11/29 earnings release date in hopes that Autodesk disappoints the market and drives it share price down as a result. Since the November options expire before November 29^th, the nearest expiration date after its next earnings are released have an expiration date of December 16, coincidentally just a few days after the Fed is expected to raise interest rates which could add a strong downward bias to the entire stock market that same week.

As of this morning, the $62.50 put option expiring on 12/16/2016 (ADSK 161216P00062500) could be bought for $1.80, which is a bit less than the $1.90 purchase price of the previous put options. That means in order to breakeven on the combined cost of both trades, ADSK stock would need to drop to $58.80 by expiration date.  Alternatively, you could buy two of the $62.50 put contracts for every one of the previous $60 put contracts, in which case ADKS would only need to drop a little below $60 to reach breakeven on both trades.