I bought TEVA calls strike 20 at 5.83 with a loss presently. it is expiring 18th Jan 2019. I want to own the stock but around 21.5. How to I reduce my loss and at the same time buy the stock. Sorry for an elementary question but am a newbie.
a) Sell Jan-2019 Puts at 22.5 strike for $2.50. If TEVA stock price stays below $22.50 then you'll get the stock for $22.50 minus the $2.50 you'll earn from sold put, so your cost/share will be $20. If TEVA stock price does go above $22.50 then you'll make $2.50 profit from the sold put. You may also sell your calls, otherwise if you keep the calls and sell puts then you'll end up with synthetic long, which is same as if you sold the calls you already own and bought the stock instead. b) If you simply sell your calls for $2.90 and buy the shares for $21.50 right now then your current cost will be $18.60 (though you'll still lose the value of the calls you've already lost).