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Subject:  Re: Best calls 6/21/2019 Date:  6/22/2019  3:36 AM
Author:  captainccs Number:  115182 of 115804

KC, thanks for the comments. Trading options is not simple as you are finding out. To reduce opportunity loss (having the stock called away) one can increase the strike price which reduces the premium. Closer expiration dates also tend to reduce opportunity loss. It's balancing these variables that is quite hard to do without a spreadsheet.

The thing to remember is that not all trades will be positive. The question is whether selling calls will improve your overall results. My results have been good so far. There are three outcomes

1.- Expire worthless, stock up. You earn the premium, rinse, repeat. Good.

2.- Expire worthless, stock down. Because of the premium your loss is less than without the call.

3.- The stock is called, opportunity loss. This is not a real loss and the trade should be profitable. For example, yesterday TWLO was called away with a large opportunity loss, $10.86 per share. But the position produced 8.9% in 52 days, over 60% annualized. Had I not sold calls the price appreciation would have yielded 8.7%, less than the option trade did. No real loss!

It's a balancing act!

Denny Schlesinger
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