Can this trade be repaired to minimize loss

[rajavel44]

[Yowster]

@rajavel44  Since you have 1 long option you can use a form of the stock recovery strategy.   This would be buying a 1x2 call ratio spread where you'd buy another September 85 call and sell 2 September 105 calls - this could be done for close to zero or a small debit and leave you with 2 long 85 calls and 2 short 105 calls.    This would cap your gains at the stock price of 105 or beyond at expiration - but it allows your gains to grow at 2x the rate (compared to just having the long call) between the stock prices of 85 and 105.    Therefore, with this 1x2 spread added your overall break-even would be lowered to the stock price being at 105 or above by expiration (but since your gains are capped at a stock price of 105 this means your best case outcome is around break-even on your overall trade).  Summarizing, if you hold until September expiration your results be as follows:

• Stock price below 85 - you lose 100% of what you paid (same as with just the long call), but since the 1x2 was put on for close to zero cost this will have minimal impact on your overall loss amount.
• Stock price between 86-105 - your loss gets smaller the more the stock price rises and the value of this spread will twice what just the long call would have been.
• Stock price above 105 - gains are capped at a stock price of 105 where the total value would be 40.00.   If the stock price is above 105 it would be the same thing as stock price at 105.