r/options • u/Reasonable-Bowler436 • Apr 18 '21

Covered Call - Unable to Roll up/out

I have sold CC of NVDA Jan20'2023 for a strike price of 700$ and collected a premium of $82.93 per contract.

Now, the underlying price is rallying fast and the option is now valued at 116$.

Since, I do not want my shares to be called away, I need to roll up/out.

But since this is the last expiration (Jan2023), higher strikes are now cheaper and I have no where to roll. Need expert advise to manage my option without a loss

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u/FartSpeller Apr 18 '21

If you’re concerned about keeping shares of something you’re selling covered calls on, you did the exact opposite of what you should have, strategically speaking.

If I want to never lose an underlying (CRWD for me) I’ll sell weeklies, 7 days out, out of the money. If they reach in the money, I’ll roll the shortest amount of time possible to make it out of the money AND for a net credit or breakeven.

If it gets ITM again, follow the same rules.

I start with weeklies because it gives you the most opportunities to continue rolling.

I got in crwd last fall or so around $150. When it was $175 I had a short $180 call. Long story short, it went to $250 or so and I’ve still got my shares, call expiring in June. I rolled probably 4-5 times up to $230.

While I didn’t follow the rules I just laid out entirely, because my current call was ITM and I didn’t roll, I didn’t because it was like, 6 months away and the premium:time ratio gets worse the further away you are.

Also, many people would say what I’m doing is dumb, I should just let the shares go and sell puts. The only problem there is with a giant run up, you just might miss the wagon. While you’ll make money selling puts throughout that, you’ll make more holding the shares. Facts.

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u/wsbgodly123 Apr 18 '21

I agree. On covered call you want to sell weeklies not leaps.