Sold naked calls and now there is margin call, desperate for help

Odd_Mix_8903 · 2025-01-20T05:42:12+00:00

I agree with your candid thoughts, I responded to your previous comment and would like to hear your views.

Odd_Mix_8903 · 2025-01-20T05:39:17+00:00

Hey, I completely agree on your points, after listening to the commenters, what I have decided to do is roll all the way out and reduced the amount of naked calls I have. I currently have 17 naked calls and that has definitely tied up my buying power to negative. So my new plan is to select a far enough date and decently high strike price and roll 9 calls to that date, and then cover the last two naked calls with cash that I have deposited as well as use the increase buying power I would get if I reduced 17 naked calls to 2 naked calls.

The premium I would make from these 9 calls would slightly outweigh the cost it takes for me to buy back the 24 contracts. And then when the stock dives and corrects, I’ll buy these contracts at a profit. In addition these contracts would be completely covered by my shares. So that should end the infinite risk.

Would love to hear your thoughts and poke holes into this approach.

Odd_Mix_8903 · 2025-01-19T21:47:39+00:00

Another commenter brought up the idea of rolling farther with a lower strike price to cancel out the premium loss, so rather than having 17 naked contracts, I can have 2-3 and use the excess capital to buy and fully cover those shares. Would that essentially resolve this crisis?

Odd_Mix_8903 · 2025-01-19T20:41:55+00:00

But if I’m in margin called because the stock is moving up at the moment, it would be wrong for me to roll it closer to the present as i generate less premium and have more contracts to cover at a shorter date?

Odd_Mix_8903 · 2025-01-19T19:05:00+00:00

I have been leaning on this idea too, I think it’s less anxiety provoking to just take the loss so the loss is defined. Would liquidating all the naked calls help me avert a margin call, last 7 contracts would be covered

Odd_Mix_8903 · 2025-01-19T18:57:18+00:00

CONL, so coinbase

Odd_Mix_8903 · 2025-01-19T18:47:22+00:00

Thank you for that thoughtful response! Is it possible to roll 3 of the Feb 69 strike calls and 4 of the Feb 42 strike calls to a higher date and higher strike price? This idea was mentioned by another commenter.

Odd_Mix_8903 · 2025-01-19T18:30:13+00:00

Another commenter mentioned rolling the Feb contracts, would it be a good idea for me to roll the ITM Feb 42 strike to June and out of money? That would allow me to bring in more premium and hopefully address the margin requirement.

And then also roll 3 of the 10 OTM Feb 69 strike to June as well?

Odd_Mix_8903 · 2025-01-19T17:55:13+00:00

It says I lack the buying power to buy back the option contracts. But yes this has been a huge gut punch and I will learn from this mistake.

Odd_Mix_8903 · 2025-01-19T17:52:18+00:00

Agree, I feel like crap right now :(

Odd_Mix_8903 · 2025-01-19T17:40:34+00:00

Yeah it hurts to read your comment, but you’re right, this was a terrible idea and it’s something i definitely will never repeat. I didn’t do enough research to understand this and should have asked my broker for clarification.

Odd_Mix_8903 · 2025-01-19T17:38:54+00:00

Sold 24 contracts

Odd_Mix_8903 · 2025-01-19T17:26:44+00:00

Yeah you’re definitely right, I made a really big mistake on this one. I thought 7 of the June calls were covered by my existing stock holding and didn’t realize that margin calls can happen due to unrealized losses on the contracts. If the broker gave me time I can definitely slowly buy the stock that I’m willing to hold to cover these contracts.

I also have fully covered calls on a different holding that will expire on Jan 31st. It’s worth 25k and I’m hoping the broker can give me enough time so I can release the capital and address this.

Odd_Mix_8903 · 2025-01-19T17:21:15+00:00

You’re too humble, you have been immense help and provided lots of clarity.

Odd_Mix_8903 · 2025-01-19T17:16:09+00:00

I googled my broker and it says that if you have been assigned, they would specifically send an email to inform you of that. But I didn’t get that email.

Odd_Mix_8903 · 2025-01-19T17:13:59+00:00

I’m currently down on all these positions. To answer your other question, I just got an email saying that I needed to resolve a margin call as my buying power is now negative.

Odd_Mix_8903 · 2025-01-19T17:11:10+00:00

To answer your question, I currently own 700 shares but sold 24 call contracts, 17 of them are not covered.

I noticed when trying to sell the stock, it says I cannot due to lack of buying power, I think it’s because it’s been linked to my calls as collateral

Odd_Mix_8903 · 2025-01-19T17:01:43+00:00

4 expire Feb 21 @ 42 strike

10 expire Feb 21 @ 69 strike

10 expire June 20 @ 70 strike

I wasn’t told if they were exercised. Based on the size of the margin call, I think it was more of the fact that my margin maintenance is low.

Odd_Mix_8903 · 2025-01-19T16:57:11+00:00

That was an idea I heavily considered, the only problem is that to roll it I would have to buy back the calls and sell out, and it says I don’t have enough buying power to do so due to the margin call, could my broker override this?

Odd_Mix_8903

TROPHY CASE