Rescue In The Money Credit Call Spreads – Investor Questions

n bull markets, shorting call options can often work against an investor. Setting up credit call spreads can often assist in protecting against larger losses rather than using naked call trades.

An investor on the Yahoo forum recently posted his dilemma with Microsoft Stock and his credit call spread position.

Since placing his trade, the stock has shot higher and it is now beyond his short call strike. Let’s review his question and then look at some suggestions:

Investor Questions:

On June 29 I sold 2 June 22 $53 MSFT calls for $0.45, and bought 2 June 22 $56 calls for $0.11 for a net credit of $0.34

On June 30 I sold 2 June 22 $53 MSFT calls for $0.55 and bought 2 June 22 $56 calls for $0.12 for a net credit of $0.43

Now, getting very close to the July 22 expiration on these positions.

Stan

Suggestions and Tips:

When Stan’s goal is to earn income from selling call options, he should…….the rest of this strategy article is for FullyInformed Members. It is 1800 words in length and requires 7 pages if printed.

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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.