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Denny,

My SQ was called away, adding almost 7% to my cash. Can deploy to a buy stock sell call. Or, I can sell put to get SQ back into the portfolio. Or, .... Could I impose on you to share your top 10 or some other subset for this week? I am going to start down my list of remaining positions to see if I want to put the money there. I have ESTC running away from me and could add to that position. Much to think about before the market opens in 9 hours.

KC
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Bad day to ask, I'm visiting a dentist today! I'll see what I can do. I gave up on puts, too risky for me.

Denny Schlesinger
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I looked at a couple of my stocks. MDB looks particularly good. July 19, 157.50, b/a $2.10/$2.20, last trade $153.10.

Will also consider ESTC as my position will likely get called away July 19 so I might get some July 26.

KC
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I gave up on puts, too risky for me.

Denny

Can you explain what you mean. Are you describing selling puts versus covered calls?
If you sell 1 put for XYZ and the price goes down $20 your down $2000.
If you own 100 shares of XYZ and the price goes down $20 your down $2000.
Whats the difference?

Mike
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Kc wrote: Or, I can sell put to get SQ back into the portfolio.

I took this to mean he would write a Put that would get exercised, the stock assigned and the premium would give him a lower entry price to the stock.

¡Que tenga buen dia con el dentista!

🙂
ralph
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I took this to mean he would write a Put that would get exercised, the stock assigned and the premium would give him a lower entry price to the stock.


Correct. In the end, I did not go the put route. I put the money into MDB and wrote a covered call on those shares. I also scraped the loose change from the account and added 28% to my ESTC holding as the existing shares are going to get called away. I did not find an interesting call so will monitor that.

As a result I have 7 holdings with covered calls expiring July 19. Six of them would expire worthless at today's stock prices. My TWLO and TTD calls expired last Friday and I sold July 19 calls yesterday. The TWLO $145's were eclipsed first day as the shares are now at $145.40.

This is all a work in progress. Don't know how long I will continue. Entertaining, for sure. Denny said I was price anchoring, which is true--but Denny is in a pure covered call mode. He basically doesn't care what the share price does. He is not investing, he is harvesting the call premium plus stock appreciation. It might as well be invested in a variable interest rate vehicle--just much higher return. The stocks are selected based on the short term return, not on the future of the companies. I am still in an investment mode and experimenting with increasing return. It is interesting, though, that I have what I would describe as Denny's attitude towards my new MDB shares. They are not an investment. Just a one week fling and then on to something new next week.

KC
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Can you explain what you mean. Are you describing selling puts versus covered calls?
If you sell 1 put for XYZ and the price goes down $20 [below the strike price] your down $2000.
If you own 100 shares of XYZ and the price goes down $20 your down $2000.

Whats the difference?


Cash flow. With the call you have an unrealized loss (a paper loss); you still have the shares. With the put you have a realized loss (a loss of cash). If this happens when you are short on cash in the account you get a margin call which can start a chain reaction, selling stuff to meet the margin call. No such thing can happen with covered calls.

Selling puts is like going into debt, you make good money on a bull market but lose cash in a bear market which is what makes it risky.

Denny Schlesinger
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