Bull call spread super ITM, but really far out in calender

L

lownetworthpers

I bought a bull call spread that is now really really in the money now. I bought a lower strike and sold a higher strike call.

However the calender date is really really far out. The spreads now are horrible.

I will make money on the trade when they assign me and I exercise the call to cover, but not by closing the contracts right now as I'd probably make maybe $0.1 per contract or something ridiculous.

What should I do? Is waiting it out the only way here?

The problem is its tying up a lot of margin. Also, how much spare margin do I need to allow when someone assigns me just in case?

Right now the broker realizes its a call spread so the maintenance margin is lower. However, if someone assigns me, this action means I am short a lot of stock and long calls (not marginable). So my equity drops and maintenance margin goes up right?

Does this mean I have to forever keep a lot of spare margin in case they assign my calls randomly?
 
If you tell us what stock and options your position is in, we may be able to be of more help.

Without that information, the simplest thing to do is simply take the spread off. You will not be assigned on your short calls before expiration (and you shouldn't exercise your longs) except in limited situations such as a dividend.


Quote from lownetworthpers:

I bought a bull call spread that is now really really in the money now. I bought a lower strike and sold a higher strike call.

However the calender date is really really far out. The spreads now are horrible.

I will make money on the trade when they assign me and I exercise the call to cover, but not by closing the contracts right now as I'd probably make maybe $0.1 per contract or something ridiculous.

What should I do? Is waiting it out the only way here?

The problem is its tying up a lot of margin. Also, how much spare margin do I need to allow when someone assigns me just in case?

Right now the broker realizes its a call spread so the maintenance margin is lower. However, if someone assigns me, this action means I am short a lot of stock and long calls (not marginable). So my equity drops and maintenance margin goes up right?

Does this mean I have to forever keep a lot of spare margin in case they assign my calls randomly?
More...
 
This is what happens when you buy spreads. They aren't as obvious as people think they are.

You don't get the same marked to market profile as being naked with less size.

Your only option is to hold to monetize the stock move or to cut and you break even after being right on the call.

Two not great options.
 
FSU is right, if you don't give accurate details of the trade it is very difficult to get good advice. It sounds like you are learning that spreads play out much differently than naked stocks or options. You might sign up for a free trial of Think or Swim, plug your trade into their thinkDesktop software and then use the analyze tab to see what is likely to happen to the trade over time. If you intend to trade combos in the future that kind of thing is a very useful exercise.
 
Its done. I closed it.

I can tell from the numbers Im stuck in it for a long time. There is no profiting early once you win and you lock in margin room and take risk in case the stock turns south later.

Does that mean putting up less money on less calls is better than a call spread that makes it 'cheaper' and caps loss but for which you are stuck until the calender date?
 
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