I am buying calls just to be safe. I think NFLX = GMCR = $17 hehehehehe..
How are you hedging your short position? any creative ideas you like to share?
actually, I did not sell deep in the money calls, but I sold calls that ultimately became in the money. I also made a decision on Friday afternoon to have the stock called away rather than buy the calls back. And as a result of that decision, the stock was called away, I ended up shorting the stock at 320, and the stock is now at 280.
"called away": if you are selling an option, you are selling a contractual right.
if you sell calls, you are selling the right for someone to acquire X number of shares from you at a strike.
if you are selling puts, you are selling the right for someone to sell X number of shares to you at a price.
most commonly this contractual excercise occurs at options expiration.
If you are selling calls, and the calls get excercised against you AND you own shares of the stock, the brokerage will satisfuy your obligation by taking the long shares away from you. They get "called away."
WeRoll did not own underlying shares. She was naked. Hence when she sold deep in the money calls that got excercised against her, the brokerage satisfied her obligation for her by lending out the number of shares she owed at the strike she sold at.
As a result, she woke up Monday morning short the number of shares the brokerage sold on her behalf. Since the stock continued to fall from there, it parlayed her original good play into a better one.
I allowed the stock to be called away (or my shorting the stock) since the stock price was run up on Friday. I do this on occasion. Often, the price goes back down on Monday, allowing a bigger profit, as in the case of CMG. I don't remember what I got for the CMG calls, but I have so far earned an additional $40 a share on it by shorting the stock for 2-3 weeks.