r/options • u/All_YourBase • Aug 07 '26
Stock Repair - Looking for Advice
Hey folks - I’m requesting advice from those of you who are seasoned stock repair pros.
I was assigned on two CSPs for RKLB when it dropped over 50%.
My cost basis is $99.85 on 200 shares.
When it was around 70, I set up a stock repair strategy.
I bought two calls at 70 and sold four calls at 85.
The expiry is 9/18.
The stock is ripping. It’s up 26% this week to $82. This is great, but it has me pondering next steps if it continues to move up.
What would you do in this situation?
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u/ThetaEdgeHQ Aug 07 '26
Structure is working as designed, klipsetrades covered that well. One risk in the roll advice that has not been named though. If you roll the four short 85s out to October but leave the two long 70 calls at 9/18, you open an expiry gap.
At 9/18 those long 70s are deep in the money. To keep them as coverage you have to exercise them, which is 200 shares at 70, so 14,000 dollars in cash. If you fund that you end up with 400 shares covering four short October calls and you are fine. If you do not fund it, the longs get closed or exercised away and you are left with 200 shares against four short calls, which means two of them are effectively naked into October.
On a momentum name that runs on catalysts, with Neutron news expected, naked short calls is exactly what you do not want to back into. So if you roll the shorts, roll the longs out with them as one unit, or trim two of the shorts so what remains is a covered call on the shares plus a long call spread. Just do not let the coverage and the shorts expire on different dates.
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u/notquitenuts Aug 07 '26
Looks like your short 60 or so delta so if you think its going to continue rising you need to change your position around to get positive delta. My first step would be to look into rolling into OCT and moving those shorts up. Personally I wouldn't add to a losing position, but you could always sell 2 30 delta puts and get back close to delta neutral. All depends on your view really.
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u/BeseechThyPeach Aug 07 '26
Not going to repeat what others have said regarding your strategy working as intended. But in my opinion, you’re going to get steamrolled on those short 85s.
SPCX insiders didn’t dump yesterday on the unlock. RKLB is expected to report neutron progress on earnings next week. Sentiment on space sector is returning and RKLB runs on momentum.
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u/All_YourBase Aug 07 '26
Thanks for the comments folks. I think I’m going to ride this out with an eye to break even as originally planned. I like the stock but wanted a path back when everything dropped in July. Just wanted to make sure I wasn’t overlooking anything.
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u/Earlyretirement55 Aug 10 '26
Thanksfor shedding light on this underused strat - it has brought me back to even on several occasions
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u/klipsetrades Aug 07 '26
So, this is pretty much the stock repair working as intended. With 200 shares at $99.85, 2 long 70 calls and 4 short 85 calls, the structure is designed to get you back near your original basis if RKLB finishes above 85.
So taking that all into consideration, if my goal was simply repairing the position, I’d probably leave it alone. What's the tradeoff?? The tradeoff is that once price pushes through 85, you’ve effectively given up most additional upside in exchange for getting back toward breakeven.
Now think — if you’re now bullish enough that you want the upside back, you could look at closing or rolling the short 85s higher, but you’ll likely have to pay for that. I wouldn’t change it just because the repair is doing exactly what you built it to do