One of the most common questions in options trading is: “What do I do when my short call is challenged?”
In a Poor Man’s Covered Call (PMCC), having the stock blast past your short strike is a “good” problem to have—it means your long LEAPS is gaining value—but it can feel like a trap. Today, I was staring down a ROKU position where my short $100 calls were in the money (ITM) with only 9 days to go. Roku hit $101 today.
Here is exactly how I managed the trade to pull out $1,350 in cash while actually increasing my potential upside.
The Problem: Capped at $100
Before today’s move, I was holding the Jan ’27 $60 Long Calls and the Apr 17 ’26 $100 Short Calls.
With ROKU trading around $100.59, my short leg was in the red. Even worse, the “Wall Street Consensus” for ROKU is currently sitting at $126.89, with some analysts like Stifel and Citizens calling for $160. If the stock keeps running toward those targets, I’d be capped at $100, missing out on all that extra profit.
The Solution: The “Double Roll”
Instead of closing the trade for a small win or letting it get assigned, I decided to “defend and expand.” I executed a double roll that did three things: lowered my risk, gave me more time, and raised my profit ceiling.
1. The Short Leg: Rolling for Room
I bought back my April 17 $100 calls and sold the May 15 $110 calls.
- The Result: I moved my “cap” up by $10.00.
- The Bonus: I collected a $250 net credit on this leg alone.
- Strategy: By moving to May, I’m now positioned to hold through ROKU’s Q1 earnings (expected April 30). With the stock showing strong momentum, I wanted that extra $10 of breathing room.
2. The Long Leg: The “House Money” Roll
This was the most impactful part of the day. I sold my Jan ’27 $60 calls and rolled them into the March ’27 $70 calls.
- The Result: Even though I moved the strike up by $10, I received a massive $1,102 net credit.
- The Math: I basically got paid $1,102 to “give up” $1,000 of strike width. That’s an immediate $102 of pure profit, plus I extended my protection by two extra months.
The Final Scorecard
By the time the dust settled, the numbers looked like this:
- Total Cash Extracted: $1,352.00
- New Ceiling: $110 (up from $100)
- Time Horizon: Short leg extended to May; Long leg extended to March ’27.
- Current Delta: ~0.81 (still perfectly aligned for a PMCC).
The Takeaway
Don’t be afraid to adjust a PMCC when the stock tests your short strike. By rolling out and up—and specifically by looking for “credits” on the LEAPS side—you can effectively lower your cost basis to the point where you’re playing with “house money.”
I’m now sitting on a much larger cash cushion and I’m ready for whatever ROKU’s earnings report brings at the end of the month.
Disclaimer: Not financial advice. Just a software dev sharing his journey through the Greeks!
