Option strategy for in the money call option

J

jmm07e

I bought an at the money call option. Now the price of the underlying stock is up about $20/share. So, the option is in the money. It's an option that expires in Jan 2022, so its a LEAP.

I want to figure out a strategy to realize some gains now without giving up the position.

I'm trying to think exactly of what to do. I could sell a put option at the initial purchase strike price. In this case I bought the call option at $95 strike price.

So, that would mean that if the purchase price falls below $95 then I would need to deliver the shares. Is that right?

That doesn't seam right though. That wold give someone the right to sell the option at 95. So, if the price dropped to $90/share I would loose twice.

What kind of strategy am i looking for? If the price drops below $95 I want to break even. I'm already in the money. I guess I would have to sell a put out of the money considering today's price and then use that money to buy a put at my $95 strike price...
 
just make a debit spread out of it, sell an otm call against it/poor mans covered call if you want to google it. Just think hard if the Volatility will come down or go up in the next couple of days going into Earnings Season or hedge by buying Vix Calls (Volatility Hedge ->Spy Vega is VIX delta)
 
that negates upside risk though

I'd rather sell an atm put and then use the proceeds to buy a put at the strike price of my current call position...i think that's right
 
jmm07e said:
that negates upside risk though

I'd rather sell an atm put and then use the proceeds to buy a put at the strike price of my current call position...i think that's right
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Upside risk? You have a Call at a lower strike price
 
okay, just to be clear the ticker is ABC -- I bought an at the money call option strike price of 95 for $1810 or $18.10 for one contract

The current market price of ABC is $118.65

The option is valued at $29.80 per contract or $2,980

So if I sell a call at say 30, 35, 40...I would give up that upside risk...which I want to keep
You might think of it differently, but that's the way my brain works

I would rather sell a put at say a strike price of $115 and use the proceeds to purchase a put at my original strike price of $95
 
jmm07e said:
okay, just to be clear the ticker is ABC -- I bought an at the money call option strike price of 95 for $1810 or $18.10 for one contract

The current market price of ABC is $118.65

The option is valued at $29.80 per contract or $2,980

So if I sell a call at say 30, 35, 40...I would give up that upside risk...which I want to keep
You might think of it differently, but that's the way my brain works

I would rather sell a put at say a strike price of $115 and use the proceeds to purchase a put at my original strike price of $95
More...
No worries, If you would have called it giving up the upside risk I would have gotten what you mean. Since ppl think this is the bottom, I'm expieriencing some heavy scew on the Putside, that's why I thought a Call far otm would be better at this point in time
 
It's difficult to determine. The general market may decrease once again in 2021. That is a definite possibility.

That's besides the point though, theoretically if the price of the security drops to say 95, I would be forced to deliver my shares on the put, and my call option would expire worthless.

I think there is more math to figure out
 
Just move the strike up a bit to take some money off the table.

i.e. sell the 95 call and buy a 110 call.

You will bank some profits, take some risk off the table, and be able to benefit from future upside.
 
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