Repair Strategy
Recover from losing stock position cost-free
What is Repair Strategy?
Repair Strategy A strategy to recover from a losing long stock position without adding capital. Constructed by buying one ATM call and selling two OTM calls against the stock at the original purchase price. The 1x2 call spread lowers the breakeven to the ATM strike while capping upside at the short call strike. Profits from a moderate recovery without requiring the stock to return to the original entry.
Complete Definition
A strategy to recover from a losing long stock position without adding capital. Constructed by buying one ATM call and selling two OTM calls against the stock at the original purchase price. The 1x2 call spread lowers the breakeven to the ATM strike while capping upside at the short call strike. Profits from a moderate recovery without requiring the stock to return to the original entry.
Example
Bought AAPL at $160, now at $145. Buy 1 $145 call, sell 2 $152.50 calls for zero cost. New breakeven: $152.50 instead of $160.
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