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I sold a Jan 2026 CRWD $140 Call, and now the price skyrocket to 235 (I know, bad move) How do one usually get out of this situation? Many thanks.

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  • There's already an answer with essentially the two options (in the opposite direction): keep it or buy-to-close. If you keep it, you can buy the underlying stock to delta-hedge the effective short position you have from the deep ITM call.
    – D Stanley
    Dec 6, 2023 at 15:40
  • Care to share your thought process in opening the trade?
    – Hart CO
    Dec 6, 2023 at 19:21
  • @D Stanley - The link isn't useful because it's about a long call and the OP here sold a naked call. Dec 6, 2023 at 19:28
  • I was not expecting the price of CRWD to go straight up in a very short period of time. It went from 90s to 100s to 110s.... to now 250s. And i had no discipline and wasn't expecting it could go so high. Lesson learnt.
    – S7. 2021
    Dec 8, 2023 at 14:04

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Per Hart's catch, I missed that this call expires in Jan of 2026 so this is an edit: If the expiration was earlier, about the only realistic thing that you could do would be to roll the short call out and pray that share price then craters. However, your effectively equivalent short position in the stock would have theoretically unlimited upside loss potential (less any time premium received for rolling). Since it's for 2026, there's nothing you can do. At some point, you're going to have to decide how much more pain you can tolerate and then close your short call.

This is a painful lesson. To a much, much lesser extent, I experienced the same the first time I shorted a stock. I didn't have a plan and I was the deer in the headlights when it moved against me. Now, I understand and practice disciplined money management and shorting is something I do regularly. Learn from this. To wit:

It is imperative that one adjusts or closes naked option positions long, long before they go 100+ points in-the-money. AFAIC, money management is as important, if not more important than placing the trade. You might consider more risk averse positions such as spreads until you have the ability and experience.

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    Can't even roll it at this point, Jan 2026 exp.
    – Hart CO
    Dec 6, 2023 at 20:33
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    Yep, I missed that. That's what happens when I toggle between trading and posting :-( . There's nothing he can do at this point other than bite the bullet and take the loss. Dec 6, 2023 at 20:44
  • Thanks all. Yes, it is a painful one. The price just gone up and up and up in a short period of time.
    – S7. 2021
    Dec 8, 2023 at 14:02
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One usually takes a loss. You chose to play with options, knowing that the risk existed. All you can do at this point is learn from the experience.

(Options are amplifiers of both gain and loss. Their best use is in a portfolio being run by an expert, where they can balance some other kinds of risk, rather than on their own.)

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  • Not all options are "amplifiers of both gain and loss". Some reduce risk. Dec 6, 2023 at 19:25
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    @BobBaerker that's what the next sentence says. But selling a naked call without any other relevant position is... an amplified bet.
    – littleadv
    Dec 6, 2023 at 20:33
  • People see the huge possible returns on a successful naked option and don't stop to think that the reason everyone else isn't pouring money into naked options is because the risk is, as usual, commensurate with the reward. There is no free lunch, folks, and no magic. Trying to get rich quick is a good recipe for getting poor quick, unless you know a lot more than everyone else. And if you know that much you may start running into insider trading rules.
    – keshlam
    Dec 6, 2023 at 23:09
  • @littleadv - His statement was about options not a "naked call". ALL options are not "amplifiers of both gain and loss." Dec 6, 2023 at 23:33
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    The use of options in complex portfolios, as I understand it, is to hope a relatively small investment in the option balances out the risk of a larger investment going the other way. It's still an amplifier of risk. It's just that this risk is carefully balanced against other risks to reduce total risk of the portfolio (at the cost of reducing possible gain for the portfolio). I freely admit that I may be misunderstanding something.
    – keshlam
    Dec 6, 2023 at 23:37

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