A few days ago I sold a weekly call spread on $TSRO based on the idea it had run too much and was due to fall back in short order. I bought a 195 call and sold the 185 for this week. I netted $2 and if the stock stayed under $185 I would keep the whole spread.
Unfortunately, after I put it on, Tesaro went up a bit more and hovered around the $185 mark. If it shot up to $195 I would be out $1,000 per option. Or an $800 loss.
I prefer to close out early if there is any question but couldn't do it because the option wasn't very liquid. I decided to wait it out this morning and decided to put in a limit order, buying back the $185 strike for a dollar. I was on the road and couldn't watch the position closely.
The stock dropped almost immediately this morning and held just under $185 for most of the morning, and around 11 my limit order filled, giving me a good profit of $100 per option less commissions.
As it turned out, the stock closed at $182. If I held all day I would have gotten the entire $2. OK, a win is a win and l'll take it. It could have been a loss, so I'm happy.
One thing I re-learned is that it's better to trade options that are more liquid. There are times you just need to end the trade early.