I have been following Dollar General (DG) for some time. After the stock suffered some declines from $250 to $160, on June 15th I wrote few puts for $100 strike expiring on Jan 19 2024 for 90 cents each.
After the earnings related another leg down on Aug 31st, I closed it by buying it for $1. Of course I lost but it is just 10 cents per contract + commission.
This discipline is very important. Not only taking losses, but more importantly accepting your thesis is not right. Now the options that I bought for $1 are having bid-ask spread of $3.1 to $3.3.
Accepting losses early means avoiding bigger losses later.