Suggest some repair startegy for naked call options

#1

Assume that I have shorted a naked call of XXX for some strike price at a premium of Rs 100 per lot. The underlying behaved as expected until the expiry day. If for some reason the the underlying XXX shot up and the premium of the strike price shorted has gone up to Rs 225. Now, what are the options or strategies that can be employed to prevent loss?

Is shorting an ITM put with at least Rs100 premium per lot sufficient? Any other ideas available?
Is there anything else to be considered for shorting ITM put as repair startegy?

Thanks in advance.

#2

CE or PE ?

#3

Repairing a shorted CE that has gone ITM on the expiry day

#4

if you have shorted for example 11000 CE

and price is now ITM , you could sell 2X 11000 PE or if market is trending you could buy 4X 11100 CE or futures.

#5

Loss is 125% so repair strategy may not be useful.

Again it depends on market condition, quantities bought or sold, available margin, etc to formulate a repair strategy.

#6

If you are in profit, then consider exiting your positions before 2-2.30pm. Because post that, big institutions start making adjustments

#7

plz bro. don’t give such suggestion on public platform, in it below 11000 you loose all your investment and even a slight downfall can give you huge loss.

3 Likes
#8

i would tell you only one thing, if you are not an expert manager of options never sell naked options

2 Likes
#9

Even if you are an options expert, don’t sell naked options. Read this… How “experienced experts” in options selling blew up their multi million dollar hedge fund.

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#10

Frankly, option repair strategies are mostly over hyped. They are also contingent on “If - this happens - then that” scenarios once a lot of damage has already happened. They certainly give intellectual satisfaction, but real utility is grossly exaggerated. Bottom line is avoid selling naked options, because a highly improbable event can still occur.

#11

Yupe not for newbies , Its just firefighting which big player does , if the market is trending up above their positions ,they usually sell PE and buy CE , should be quick to exit though.

#12

Shorting ITM put options ? Why on earth ? Aren’t there any other possible trades possible (including no trade) ??

#13

Hi,

I’m a full time trader (The trading to pay bills type). I use 2 completely different trading strategies one Option Buying and the other Option writing (Either CE or PE depending upon market movement). Both are not related to each other in anyway.

Option writing is shown as a devil, since the profits are limited and losses unlimited. I agree with this, but one should also consider that the accuracy is far greater than Option Buying (naked buying). So with proper risk management and keeping SL, option writing can be a very profitable strategy, generating regular cash flows (may not be monthly, but nevertheless, regular). For a trader like me, trading to pay bills kind, regular cash flow makes all the difference in the world.

I’m doing this regularly and recently I have even started posting my trades for the day after market hours on twitter. Please follow my handle @AnanthaRaman19 for checking my trades (Both Option Buy and Option Write)

#14

good you observe that, a thing you must have seen if seen some big player’s position, they are always hedged