Replies to post #534 on Dividends , The Wheel --Cash secured Puts and Cove

[Porgie Tirebiter]

You could buy it back and take the loss. But since you have about 5 weeks to go you would be paying too much as you would also have to purchase the remaining implied volatility.

This happens to me a lot. If I'm going to repurchase the calls I would do it late in the day on Feb. 19th, when the calls will trade very near their intrinsic value.

Or, if you have the cash, sell puts at the same or next lower strike. But that strategy only applies if it's a stock you have a compelling reason to own.

Bear in mind that while the calls are "in the money" you could be exercised at any time, particularly if there is an ex-dividend prior to Feb. 19th.

Whether these are in a taxed account or not also makes a big difference.

But finally, the shares might just drop back below the strike and all of the above won't matter anyway!

[leftovers]

you can always buy it back to close the trade. You might let it get called then sell Puts until you get Put back the stock thus why it's called the wheel.

If you buy it back you will lose and increase your cost biases . By employing the wheel strategy you can lower your cost!

[stoner422]

What's the stock? Just because it hit the strike now doesn't mean it will be above it on expiration in February. Then why buy back a call when you're going to spend more than the premium you made, better to just let it expire and rebuy it with selling a put.