Facebook Stock- Rescue In The Money Credit Call Spreads – Investor Questions

Many investors love to set up credit call spreads in bull markets. In my opinion they are better suited to bear markets or for individual stocks that show signs of definite stress or weakness.

An investor emailed after credit call spreads he placed in Facebook Stock (FB) ended up in the money as Facebook Stock continues to rise.

Since placing his trade, the Facebook stock has shot higher and it is now beyond his short call strike leaving him with a probable loss. Let’s review his question and then look at some rescue suggestions. His question has been edited for this article.

Investor Questions:

Teddi,

I have an underwater Facebook call credit spread expiring on August 19 2016: I am Short $115 call strike and long $120 call strike.

I will appreciate any advice on how to salvage the trade.

I have 10 contracts each leg. I have $30,000 available cash.

Thanks,

Dima

Suggestions and Tips:

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Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk. Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed and presented are financial or trading advice or recommendations. Everything presented and discussed are the author’s own trade ideas and opinions which the author may or may not enter into. The author assumes no liability for topics, ideas, errors, omissions, content and external links and trades done or not done. The author may or may not enter the trades mentioned. Some positions in mentioned stocks may already be held or are being adjusted.