The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question – “How to fix a losing short call option trade?” As we’ve talked about yesterday where we’ve talked about fixing a losing short put option trade, today’s discussion is exactly the same, except it’s in reverse. And again, as a disclaimer, we’re assuming here that you did all of the right things before you actually entered the short call option, things like properly adjusting your position size that you’re not taking on too much risk, selling options probably close to the money, but not necessarily at the money or far, far out of the money, so somewhere around a 15, 20-ish Delta potentially, you’re selling options out of the money and you’re using the right risk metrics. Now, assuming you’ve done all of these things right, there’s again, two ways you can fix a short call option trade or hedge the short call option trade. The first way is to create a spread. Creating a spread woul