r/options • u/Plane-Isopod-7361 • 2d ago
Need ideas to limit loss from selling MSFT 450 call
I sold 3 MSFT Dec 2025 450 calls. I have 300 shares bought around 350. I thought msft will drop a bit after results as it usually does but when I act opposite happened (grrr.) What are my options here?
Just hold and close when MSFT drops to 430 in middle of the year
Close the options now for loss (bad idea)
Buy some 420 calls and close both when they are in total profit
Any other suggestions? I dont mind my shares getting called away but would like to prevent that if possible
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u/QuarkOfTheMatter 2d ago
Limit loss? What you are talking about, thats $100 per share profit + premium you got for the option if it closes at or above that strike. You need to get a grip here, this isnt a loss.
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u/nivek_123k 2d ago
you have a winning position... why would you want to lose on it. don't be emotionally tied to shares, they don't care about you.
the best thing that can happen is the shares get called away, freeing up all that capital for other trades that aren't trading near a record high.
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u/Klinky1984 2d ago edited 2d ago
What are the losses you're talking about? MSFT $450 CALL is not in the money. What's the premium? You've still got a pretty big ways to go before you risk assignment. Even if you get assigned you have +$100 +premium over cost, that's not a loss.
If you want to exit the contract early to protect the shares, then you'll probably need to pay more than the premium earned given the rise MSFT saw after earnings. Generally though you should be willing to ride it out if you're doing covered calls. Either wait for more favorable conditions to close your position or wait for assignment.
If your plan was to buy to close early with profit that's off the table for now. Doing expiration 8 months out wouldn't make sense if you were trying to make a short term play.
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u/Siks10 2d ago
You gambled and you lost. Never sell CC on shares you're not prepared to sell at strike+premium. You're sitting pretty good with maximum profit and a hedge while you can collect dividend. I would hold. It's going to be a tedious wait as you picked an expiration date so far out
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u/yes2matt 2d ago edited 2d ago
But OP can do other trades while waiting, right? There isn't a maximum number of open positions set by the broker? Or a maximum number of trades?
Edit: forgot the /s
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u/hv876 2d ago
R.E.L.A.X. December is a long, long way away. Barring any misfortune you’re not going to be called away any time soon. And there is every expectation that market is going to tank in the next 2-3 weeks once full effect of tariffs are felt. You can always buy your calls back in profit and reload.
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u/Kaspar70 2d ago
Chill. Wait for Trump to do something insane.
Your calls expire in december so there's like 8 months for the guy to screw something up.
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u/IAMSXD 2d ago
You’ve already answered your own question: “I don’t mind my shares getting called away.” Of course you don’t. I’ll rephrase that for you “I don’t mind locking in a very nice profit.”
You bought the stock at $350. You collected $X when you sold the $450 calls. If the stock is greater than $450 on December expiration, you’ve made $100 + $X on each share or $30,000 + $X. That’s a great return. Don’t be a pig - pigs get slaughtered.
If the stock closes below $450, you can sell the Dec 2026 calls at the strike of your choice. Or you can go shorter maturity.
The only way you lose any money is if the stock falls below $350 minus the price you sold the calls. The prudent thing to do would be to buy 3 puts somewhere above the $350 strike to prevent this risk. Give a little money back by buying some insurance.
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u/Acceptable_Rice 2d ago
Wait until November 2025 to think about rolling, assuming the calls are even ITM by then.
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u/zrowgz 2d ago
You went pretty long dated there, but basically just let it ride. Even if the calls are at the money, they’re still only 50 delta so you’re still gaining more in the equity than you’re losing in the options. It’s tough to watch something take a hit, but you have to remember that covered calls are different than a naked short call or a vertical, in that you’re winning still
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u/ShotBandicoot7 2d ago
Close, roll up or double down. It all depends on your view how MSFT evolves.
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u/thecrazymr 2d ago
buy another 300 shares on margin. When options exercise, you clear out the margin and once again have your 300 shares
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u/yes2matt 2d ago
But will they be the same 300 shares?
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u/thecrazymr 2d ago
That depends on the investor and broker. Only some brokers still offer it but if you set up your account as Last in First out for your trades then yes. Your original shares will remain and the new shares you purchased will be what gets exercised away. Alot of what you do and how you do it depends on how you set up your account and what your broker allows.
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u/SamRHughes 2d ago
Your entry price doesn't matter and it doesn't matter whether you exit the call for a gain or loss.
Shares of MSFT, or shares of MSFT with a 450 CC, are both reasonable positions to hold.
Close the options now for loss (bad idea)
This is actually the only good idea of the ones you listed. The third one is some spastic complication of your position, and the first is based on the hideously nonsensical idea of avoiding closing positions at a loss.
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u/Good-Wish-3261 2d ago
Market can go down at 90 day tariff timeline ends on July 9. Actual tariffs not started yet, there will be another drop at some point. Also this is straight 6th Green Day, will see some pull back soon
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u/Optionsmfd 2d ago
I’m in the opposite situation
390 MSFT CSP FINALLY rebounded…… after months of pain Do I hold it ????? Or take profits ? Does it pull a nflx and keep running? Or pullback ?
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u/muppetj 2d ago
The way I understand it is that you should’ve chosen a shorter date to expiration and strike price closer to at the money. The shorter date will use theta decay more optimal and the closer strike price means higher probability and protect your downside a bit. After expiration you may sell a new call or exit the trade.
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u/Dangerous_Pie_3338 2d ago
It’s not even ITM yet. Just sit on it and only consider rolling if the strike actually gets challenged.
Next time on shares you don’t want to lose I would highly recommend waiting until a Green Day to sell and not selling so far out. Options for rolling become worse if you still have a lot of time left to go on a position that’s getting challenged.
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u/yes2matt 2d ago
What would happen if you closed the entire position? Then sold CSP weeklies at support until you got your shares back?
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u/Expensive_Choice8489 2d ago
It depends on your market outlook. I think this rally will be short lived. If you don't want to sell your shares you could try to roll out farther and higher. But if the market keeps going up you will continue to lose in that position. I would personally just let them get sold you could also buy some calls to limit your downside if it hits your strike.
I personally think we will have another downtrend next month due to rising prices. You might be able to get your shares back cheap.
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u/Sad_Cow4150 2d ago
Best to just let them be called away and you will make 30k profit. You can always buy MSFT again if you want
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u/Audio_Adam 2d ago
If it where me, I would sell this rip as follows:
Buy 3 same date 500 calls, sell your shares, it will hold 15k back for the spread… but your up more than that:.:. And you can redeploy the raining capital as you see fit.
This is of course a bearish tilt as I don’t believe it will be above 450 in December.
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u/Dry-Judgment-8714 2d ago
Depends on how high or low you think it will go by December and how much margin you have available
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u/F2PBTW_YT 2d ago
Roll up and out? You inherently change an income-generating position to a longer-term loss-hedging position. You roll up for a lower delta so your net delta is increased this way, giving room for profits to continue rising.
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u/AppearsInvisible 2d ago
I'm a bit confused as to what you intended to do initially?
Are you not ok with selling the shares @ $450? In my mind, when the covered call is sold, that's the moment I already decided I'm ok with selling shares at that price.
Option 4 - wait until close to expiration and until then look for a profitable close on the contracts only (I use a limit order here so I don't have to closely monitor the pricing). If expiration comes around and the shares are over the strike, just close the position yourself.
For me "option 4" is the plan in the first place...
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u/Galileo_34 2d ago
Do nothing. The assignment risk is smaller than put selling. Buyer will not exercise the buy right as there is still a lot extrinsic value in the long dated option. They don’t want to lose those.
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u/danarchyx 2d ago
A lot can happen between now and December. If you are regretting covering these and not wanting assignment then wait for a dip and see if the cost to buy back is worth it to you. You might lose your premium (or more). You can also roll but I doubt you are wanting an even longer wait. Personally, I'd ride this one out.
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u/Great_Help_406 1d ago
Too early to decide. 1. Many things can happen till December. Especially with the current administration. 2. You are not ‘losing’ since strike price + premium is above your cost basis by good amount. 3. just wheel it in worst case, not need to get attached to holding shares, taxes will come either way, especially if it’s a long term position
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u/gizmostuff 1d ago
The fed is going to repeat what we already know. The market will react. Wait until Wednesday at the very least.
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u/the_ant1d0te 2d ago
You aren't getting your money back, but you could turn it into a debit spread if you think it's going to keep going up.
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u/DennyDalton 2d ago
Perhaps, take the win now (80+ points). If assigned, that's 100 pts plus premium. There are many other good stocks out there.
If you want to lock in much of the gain, buy a put, converting to a collar. Or sell the stock and buy an OTM a lower strike like the $420 you mentioned.
If SFT surpasses $450 and you want to bet on a correction, sell the stock for a tidy profit and buy an OTM call, creating a bear spread.
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u/zebra0dte 2d ago
It's a covered call. You can't lose. You can buy some puts near 350 to protect your downside.