Is there a way to capture missed gains on a covered call if the underlying skyrockets?

Zestilio

Zestilio

If I bought a stock and wrote a call, but then the stock jumps waaayyy up there above the strike, what are my options? If I buy back the call just before expiration, I'd be paying intrinsic value since it's ITM, but then I still have the stock, so if it continues to climb, I can cash out and make a (small) profit.

Is there any way to profit on the large upswing that happened, or are those gains lost to me forever? If I buy back and sell, it's zero-sum, and if I let the assignment happen (as it most likely will), then I still don't see any of the gains above the strike.

I'm guessing this is just a case of trading capped gains for higher POP and I'm out of luck this time around
 
rwk said:
What the OP describes is the only downside I can think of for selling covered calls. Otherwise it would be "free money".
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Correct ........ And it's the deal-breaker when it comes to Covered Calls. The premium just isn't worth it.

Same thing with Debit Spreads, that short option might come back and haunt you.




:)
 
Try roll it out. If the IV is high enough, you maybe able to roll out to a higher strike price and at the same time receive additional premium. I did that with ____ a few months back when it gap up due to earning beat, later I bought back the short calls when the stock price went down with the market retreat. But if stock price does not come back down you will lose again.

If IV is low, roll out to a higher strike will cost you and may not be worth it.
 
OTM-Options said:
Selling OTM Put Spreads would be better. He owns the stock - so he is bullish.
:)
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There is no way to capture the lost money but this is a better choice than writing covered calls. Few people realize that covered calls are essentially naked puts.
 
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