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Is it still a Calendar Spread?

Mark,

I am wondering about proper management of a multi-month calendar spread. I initiated the position in November with selling the Nov 40 call and buying the June 40 call. The stock price at that time was around $37 and I had a bullish bias. The stock has trended up and so far the Nov, Dec, and Feb calls that I sold all expired worthless. In Feb I increased my short strike to 41, and it closed just above $40 last Friday.

So now my long June 40 call is in the money, and I will probably look to sell a March 43 call.

My question is this – if my bias remains bullish, is the proper strategy to just keep holding the long June 40 call and keep selling short calls with higher strike prices, or is it smarter to just sell the June 40 call and initiate a new calendar at the 43 strike price (sell March 43/buy June 43)? In my studying of options I haven’t seen this topic discussed – but it seems to me that replacing the June 40 with the June 43 would lock in profit and reduce risk if the price goes down from here and is probably the smart move. Would there be any good reason to not do this? Thanks.

sandeep

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