Suggestion to recover from a bad naked call

Question

I sold a Jan 2026 CRWD $140 Call, and now the price skyrocket to 235 (I know, bad move) How do one usually get out of this situation? Many thanks.

Answer 1

Per Hart's catch, I missed that this call expires in Jan of 2026 so this is an edit: If the expiration was earlier, about the only realistic thing that you could do would be to roll the short call out and pray that share price then craters. However, your effectively equivalent short position in the stock would have theoretically unlimited upside loss potential (less any time premium received for rolling). Since it's for 2026, there's nothing you can do. At some point, you're going to have to decide how much more pain you can tolerate and then close your short call.

This is a painful lesson. To a much, much lesser extent, I experienced the same the first time I shorted a stock. I didn't have a plan and I was the deer in the headlights when it moved against me. Now, I understand and practice disciplined money management and shorting is something I do regularly. Learn from this. To wit:

It is imperative that one adjusts or closes naked option positions long, long before they go 100+ points in-the-money. AFAIC, money management is as important, if not more important than placing the trade. You might consider more risk averse positions such as spreads until you have the ability and experience.

Answer 2

One usually takes a loss. You chose to play with options, knowing that the risk existed. All you can do at this point is learn from the experience.

(Options are amplifiers of both gain and loss. Their best use is in a portfolio being run by an expert, where they can balance some other kinds of risk, rather than on their own.)