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Real-Money Stock Picks / Jim Royal

URL:  https://boards.fool.com/hey-vince-you-should-always-consider-the-merits-34251347.aspx

Subject:  Re: Am I thinking correctly here - ROKU options? Date:  7/16/2019  5:12 AM
Author:  XMFRoyal Number:  4687 of 4753

Hey, Vince,

You should always consider the merits of the incremental investment and not entangle your prior decision with the new one. If you roll, you're effectively closing the old position and setting up a new risk-reward. So I would consider what that is. Incrementally, you'll have $300 tied up in the trade to make $500. But in the incremental trade, how at risk is that $2,400 you're putting into the trade? If it's not substantially at risk, then you shouldn't consider it part of the denominator in factoring your return. If you could lose most or all of that money, then it definitely needs to be considered as part of your total return calculation. That's how I would think about it more generally.

Jim
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