The reason is that you are closing the short puts (305), let’s say in this example they are $7.50 each. When you first sold them they were $3.10, so now you’re down $4.40, which sucks. Now you’re left with just good ole fashioned Puts with a strike of 300, and they’re worth $3 – in order to reach max profit those puts need to be worth the same amount you spent to close the short puts ($7.50). Which means the stock has to keep dropping (another $5 or so). The higher in value those 300 strike puts are, the less money you lose. 

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