I have 600 shares of MSTR and I wrote 6 MSTR 241206 Calls 450 against them. The expiration day is this Friday but there is a high probability of losing my shares. I am exploring ways of avoiding this. I can roll them with as high strike as the rolling credit allows me. I could replace the position before Friday with new funds and let the current position taken away. There is the risk that I will double my position if the current calls expire out of the money. Any ideas are welcome.
After the close of the market on Friday, you'll know whether the calls are in the money. If they are not in the money, do nothing. If they are in the money, buy the stock in the extended hours trading session. This is not a perfect solution. If the calls are in the money, there is a very, very small possibility that they will not be exercised, and that you will not be assigned. And you won't know 100% for sure until Saturday or Monday. But that outcome is extraordinarily rare, and most traders are willing to treat it as zero probability or a black swan that they do not try to plan for. Unless the calls are in the money by only a few cents. Then the probability that you will not be assigned becomes a real thing. But in most scenarios, this approach works. This may not accomplish exactly what you want. During extended hours, you can buy the stock if you know that your shares will be called, but you can't sell new calls during extended hours. You would have to do that on Monday morning. Can you sleep over the weekend without the hedge?
Thank you for your response. I wish I have only problems like this in my trading. I was getting the pain while the stock was going down and this looks to be a fantastic trade so far. Your approach is excellent, but I am also considering rolling over the current calls with same expiration but very, very deep in the money so that they will be called for sure. At the same time, I would replace the stocks buying them with new funds. How that sounds?
I'm no expert and currently do not have any mstr shares, but I do have mstr call options, some are ditm and have thought about ways to hedge, but off topic to your situation for this Friday Just an idea, sell 6 put options 420 strike, collect the premium which you can use when buying back the shares if you get called away on Friday you have a sweet spot 421-450 where both your short puts and short calls expire worthless and you keep all the premium you can of course adjust to 430-440 or even higher strikes puts or lower , but 420-440 are for collecting premium and more defensive, not offensive If mstr closes lower than 420 on Friday, short 600 shares after hours so when you get put, they cover the short I repeat, not an options expert, just playing with scenarios in my head, good luck, only 2 trading days left
Those are good ideas, thank you. I will wait for the open today, hopefully IV will be high enough so that I collect high premium by rolling over current calls to deep in the money calls. That way I know that my shares will be called away. At the same time by 600 shares with new funds and maybe sell calls against them I am not sure if this is a better approach than rolling over the current calls for a higher strike and longer expiration date
Not sure why this is even a question. If you want to retain the shares just roll the options. But why agree to sell all your shares at the same price on the same date??? At USD441 at yesterday's close, your short 450 were c. 5 each to buy back Taking 25 delta as a reference point, you can Buy to Close and in the same transaction sell: 2 x 13 Dec 520 C for c.8.50, or c.USD700 credit 2 x 20 Dec 560C at c.12, or c.USD1400 credit 2 x 27 Dec 580C at c.15, or c.USD2000 credit Then just sell 2 more 3 weeks out each week, rolling if necessary. Obviously choose delta that matches your objectives, 25 is just an example for illustrative purposes.
If you're buying new shares to sell covered calls against, those are synthetic naked puts, but with one transaction, so not sure how to map out the greeks but maybe alternative to that is selling itm puts and if mstr continues to climb for the next 2 trading days, those will expire worthless or you capture enough delta to buy AH but to be honest with you, I'd be terrified to do any of those, so maybe stick with the CC method, I've only done buy to open and sell to close, I've never even done CC's, only long calls and puts from all my options trade history
Mstr will be under 450 Friday. Collect huge premiums on that. If it's above roll it out, mstr isn't staying above 450 for long
The vols reset (lower). If you don't want to be taxable on the shares (in 2024) then you should probably buy the diagonal now (BTC M1 call, STO M2 call) in Dec/Jan.