Long calls & puts
How do I manage a long option position when the underlying asset undergoes a massive gap move?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
After a large gap, reassess the position using updated delta, implied volatility, and remaining time value rather than original assumptions, and decide whether to take partial profits, roll, or exit based on the new risk/reward.
How it works
A gap often changes an option from OTM to deep ITM or vice versa, altering its delta and sensitivity to further moves, and can also cause a sharp change in implied volatility that affects extrinsic value.
An example
If a long call gaps deep ITM overnight on acquisition news, a trader might sell part of the position to lock in gains and hold the remainder with a trailing stop on the stock price.
Risk & limitations
CBOE risk disclosures note gaps can occur outside continuous trading hours when no adjustment is possible, so stop orders on the option itself cannot guarantee an exit price.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.