Robin, back to options: In my last three years of trading options, I've made much more money than I've lost. But, I also have paid more for options by buying in-the-money calls and/or long term calls before the big upward moves in DELL. I rarely buy out-of-the-money calls, and only when they're long term (1 year or more). This means that, barring some calamity, my options always have value.
You got burned here, because you bought too late into the upward move. You are also the victim of a richly valued market. Buying out-of-the-money calls in this scenario is a recipe for disaster.
If I owned the Sept 120s, I'd split the difference between the options I'd like to own (say the Sept 100s) and those that I do. I'd sell the 120s, and use the proceeds to buy as many 100s as I could. My reasoning is that the 120s may expire worthless.
You might try a straddle in which you sell naked Sept 120s, and use the proceeds to buy Sept 100s. If it goes past 120, you get called, but you can also use the 100s to satisfy the call (saying that you by enough 100s to cover the 120s). You're limited on the upside, but you may be able to recoup a big amount of the money you're in the hole. I would not be inclined to do this, however. It goes against my personal philosophy, but it may work well in your case.
In any event, I'm sure that someone else on this thread may be able to better explain the latter strategy to you better than I.
Regards,
LoD
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