Maybe some of you could give advice on how to best deal with this. I bought a NVDA AUG30 112/120 bull spread which is at the time of writing ITM. Now I've changed my mind and I may want to acquire those shares @ 112 since I'm still bullish (yeah, I should have probably bought more back then during the dip but still…). I'll wait till earnings call to make a final decision on this.
The question is how to best deal with the short call. Should I roll it out immediately? Since the short call is ITM too there's the risk of early assignment, although time decay works in my favor here..but it's just few days away.
What's the best strategy in your opinion? Rolling the short leg and turning this into a covered call could be one possible exit.
Turn a NVDA call debit spread into covered call
byu/fullstack_investor inoptions
Posted by fullstack_investor
2 Comments
Take profit and close both legs. After earnings report open new call debt spread
Rolling the short call to turn your debit spread into a covered call is a solid strategy. Given the time decay working in your favor and the risk of early assignment, waiting until closer to the earnings call to make the roll might be the most prudent move. You’ll have a better sense of IV crush and potential price movement then.