Holding long $30 callcisgenderedAggie said:oldarmy1 said:
Not sure how many of you have access or comfort level with shorting against calls but if you hold BJ call options into earnings you need to be up and at your computer ahead of earnings. If you get a major spike say $35+ then when you see it topping you short against your $30 Puts. Two reasons. The calls will lose premium value built up in earnings at the open tomorrow. Secondly you lock in $5+ gains on some or all for a nice win. I hardly ever carry a naked call into earnings and do not short a good portion of equivalent shares on a pop.
For beginners, a call gives you the right (the option) to buy BJ at $30/share. So if BJ is at $35, say, then you can short it and then use your call option to buy the shares at $30. BUT, no need to do so if the stock comes back down. In fact, I will sell the call on the open if the shares shorted are up $1+ over my short entry.
Looks like this. Say BJ opens at $34 after a $35 spike.
$30 Call opens at $4 in the money plus there would be maybe $0.40 premium so sell calls for $4.40 at the open. Now you have a short position up $1 and can cover if you see $35, or cover for an extra $1 and be done. But if you get some more downside then you are in command. You must have a good system and you must be deliberate for all of these strategies.
Want to try, but not sure I'm clear. You are saying to do this?
- am already long $30c today
- at open, if BJ spikes, STO $30c? This leaves me with an open long and an open short, but not a 0 position.
Wouldn't that be the same as sell to close?
BJ spikes to $35 overnight, sell equivalent shares (100) short at $35.
BJ opens at $34, sell Long $30 calls to close for $4.40. At this time, short is up $1.
