Strategies to save a naked call

Hey guys

What do you guys do when there is a sudden movement and your stock goes in the money? Which is the best option to save the naked option /exit with minimum loss?

  1. Square off and roll out to next month with the same strike?
  2. Square off and roll out to next month with a slightly out of money strike?
  3. Convert into a strangle/straddle to get more premium and wait it out?
  4. Buy the stock and convert into a covered call?
  5. Buy a deep itm option and convert to a spread

I have done all with varying results, but want to know which is your go to adjustment when your naked call is tested. Please post if you follow some thing else as well.

Intraday adjustment :

Buy Future when It crosses your breakeven and be in the future until it come down to buy price. And Exit.

Positional adjustment : Buy Next Month call option same Strike + sell some safe Put option current expiry for premium

2 Likes

If all these 5 options do actually repair your endangered naked call?
Since you have tried all these options , will you please let me know your observations.

easy. don’t trade a naked call.

It all depends on the news/velocity , OI levels, presence of option chain, next month liquidity, margin in hand etc

1 Like