I've been trying to brainstorm all of the ways to deal with my problem BCSs next week. I wanted to get everything written down in one place mainly to help me organize my thoughts, perhaps this might help others in the same boat. Here are all the possibilities (good, bad and ugly) that I could think of:
#1: Close whole position for loss (before max loss)
#2: The ripcord - close the short call for a loss, let the long call run. (Possibly end up better than #1 if stock continues up, worse if it goes down)
#3: Roll/convert the short call out to an ITM short put, keep the long call. Both make money if stock goes up. (Both lose if it goes down)
#4: Convert to debit spread (More loss initially, better if SP rises fast)
#5: Split roll - half the spread, double the contracts - more time and strike improvement (hoping for a pullback in SP)
#6: Keep the spread open, sell the long call at what you think is top (for profit). At that point have a naked ITM call to manage (presumably easier to roll and manage than spread, but giving up defined risk)
#7 Convert to temporary inverse diagonal, then naked call? Roll short call for credit/strike improvement next week, keep the current long call open to run. Sell long call (for profit), then continue to manage ITM short call.
#8 Roll spread for debit to buy more time.
#9 Do nothing and wait, possibly hit max loss or no loss.
Which strategies have I missed and/or am wrong about?
If we have a "gamma squeeze" Monday, 2-4 could do well and resolve the positions quickly. 5-7 buy more time and could eventually end up with no losses if SP comes back to earth.
Assuming we do rise more and come back to earth, #7 is interesting to me, but I need to think on that more. A lot depends on how we are looking in the premarket. If I am feeling bold I might try #2, but #1 is definitely on the table.
