I know IRTC and BEAT are not popular stocks around here but there was some news last week that I missed regarding reimbursements.

Investing is not a popularity contest. I'm long BEAT and have no position in IRTC. There have been a series of negative reports from SA on what to me seemed rather unknown analysts. One report had the smell of a short hit piece and the author was short the stock.

IRTC: https://seekingalpha.com/symbol/IRTC

BEAT: https://seekingalpha.com/symbol/BEAT

I like BEAT, the market leader.

Denny Schlesinger

Denny-

Some time later than this April post, I remember seeing your reporting that you exited BEAT.

Did you also make a post on your reasons for exiting? (Looking around, I don't see a compelling reason; maybe I'm looking in the wrong places?)

(I am long, all of four months now, since MAR 2019, with a smallish position, but am tiring of seeing it being my perpetual performance cellar-dweller here, especially when all else are quite happy... would like to convince myself whether or not I am simply getting impatient at four months, or holding on to a loser and need to cut losses.)

TIA.

Not Denny, but I took a quick peek.

FWIW, chart looks ugly. Looks like it is broke below resistance. I do not see any meaningful support until $35.

Did you also make a post on your reasons for exiting? (Looking around, I don't see a compelling reason; maybe I'm looking in the wrong places?)

I sold BEAT on May 1 at $53.60 but I don't recall posting about it. What I do recall is that May was the month that I finally rotated from NPI style investing to investing (or trading) based on the Call Selector and it's working great.

With Socialists and Populists running the government I don't think healthcare is a good place to be. I love free markets, not central planning like the following:

U.S. Senator introduces bill to cut insulin prices

U.S. Senator Jeanne Shaheen (D-NH) has introduced a bipartisan bill, the Insulin Price Reduction Act, that she says will rein in skyrocketing costs of insulin while holding pharmacy benefit managers to account for their role in surging prices, adding that the cost of the most popular insulin should drop by more than 75% (based on estimated 2020 prices).

https://seekingalpha.com/news/3479829-u-s-senator-introduces...

Thank god they don't worry about cutting costs for business! LOL

Not only is SaaS a great business model, politicians are not meddling there. Mr. Market loves stocks that are going up and the Call Selector seems like a great tool for gauging which of these growth stock are most in favor any given week.

On Friday I find out that got called and what expired worthless. On Saturday I download about 50 option chains and ask the Call Selector to pick the good ones. The latest version can compare all the download chains in one go which saves a lot of time and improves the final selection. I tighten the parameters until the output is reduced to less than 20 possibles. I transfer these finalists to a spreadsheet for the final selection. By market open on Monday I'm ready to place my orders.

Today I sold

TWLO Aug 2 2019 152.5 Call
ENPH Aug 16 2019 22.5 Call
LSCC Aug 16 2019 17.5 Call

By August 16 all my legacy calls will expire and the trading based on the Call Selector will be in full swing.


(I am long, all of four months now, since MAR 2019, with a smallish position, but am tiring of seeing it being my perpetual performance cellar-dweller here, especially when all else are quite happy... would like to convince myself whether or not I am simply getting impatient at four months, or holding on to a loser and need to cut losses.)

Take Saul's advice, don't fret about it. If there is something better, go for it. ;)

Procrastination is a manager's worst sin. We don't fall in love with stocks, we just hate to admit that we made a mistake and tend to couch it terms like "I am long, all of four months now, since MAR 2019, with a smallish position, but am tiring of seeing it being my perpetual performance cellar-dweller here, especially when all else are quite happy... would like to convince myself whether or not I am simply getting impatient at four months, or holding on to a loser and need to cut losses." Where did I read that? LOL

Denny Schlesinger

Denny,

TWLO earnings are out July 31 and your option expiration is August 2. For what it is worth....

KC

TWLO earnings are out July 31 and your option expiration is August 2. For what it is worth....

I have been thinking about earnings but so far I have ignored them. This week TWLO was the top call to sell. Go for a lesser call or ignore the earnings date? What would you do?

Ticker    ----- $$$ per day -----
        Premium   Called    Total
TWLO      52.54    25.88    78.42
ENPH      38.87    45.02    83.88
DOMO      27.71    15.98    43.69
LSCC      27.52    34.17    61.69

With TWLO I'm collecting 35% more premium up front that the next best.

I think that earnings can be safely ignored.

Denny Schlesinger

I have been thinking about earnings but so far I have ignored them. This week TWLO was the top call to sell. Go for a lesser call or ignore the earnings date? What would you do?

What I did do was avoid the August 2 calls for TWLO. Upon further review, that might have been overcautious. With a 5% price drop from today's closing price you would end up with negative $37/day (I think)net. Not a disaster. Have to expect losses.

I found it interesting to try to do forensic analysis of your trade. Seems as though you executed it very early in the Monday trading day. The $/day is uncertain in practice as the underlying went from $146 to $149 in a few minutes. I assume that you buy shares and sell calls "simultaneously". But the actual ratio of premium to if-called is uncertain in practice.

what I did Tuesday near the open was

ZS 8/2 $88.50 sold for $0.90;
TTD 8/2 $252 sold for $3.00;
MDB 8/2 $170 sold for $2.35.

The TTD trade was interesting. These were shares I have held for awhile, so just entered order for the calls. But, prices were moving and it seemed clear that the TTD was not going to execute. So, I cancelled the sell-to-open order on TTD. Then I tried to enter a new order but even though the first order was shown as cancelled, no open orders, the new order was not accepted. Problem with the broker's software. Ended up making a simultaneous order for shares and calls giving me a double holding of TTD. Turned out o.k. as the price went up during the session and I sold the extra shares for a nice profit in the after-hours market when I woke up this morning.

KC

The $/day is uncertain in practice as the underlying went from $146 to $149 in a few minutes. I assume that you buy shares and sell calls "simultaneously". But the actual ratio of premium to if-called is uncertain in practice.

$/day has two component

On open: premium collected / days to expiration. Nothing uncertain about that.

On close: stock capital gains if assigned / days to expiration. This is UNcertain, the max capital gains on the stock.

The above is the reason to favor a hefty premium over potential capital gains on the stock (bird in hand). Besides, it gives the stock price more support by lowering the cost basis should the call not be assigned.

I apply the selection parameters sequentially

1.- Premium $/day
2.- $ premium -- gets rid of very short trades, a week or less
3.- Capital gains $/day if assigned
4.- Eyeball what remains


I assume that you buy shares and sell calls "simultaneously".

Pretty much. I treat each trade as an independent event, that way there is no anchoring, no emotions, no wouldHave, couldHave. BTW, the results of the Stock Selector are just guidelines, if on Monday morning I can't get a trade similar to the suggested trade, I don't do that trade. It also involves calculating the cash available to buy round lots after selling shares that won't be used to sell covered calls. It's a lot of activity over the weekend but the rest of the week is free. ;)

Denny Schlesinger

if on Monday morning I can't get a trade similar to the suggested trade, I don't do that trade.

Denny,

That is what I meant by the uncertainty. You have the game plan ready, 4 or 5 possibles and the ranking of them. Even before the market opens you know the pre-market direction of the share price. But even so, once the market opens there are a lot of moving parts, the relative attractiveness is in flux. So, you forego a trade, and maybe move that money to other possibilities, perhaps with a limit as to how much you will put into one stock.

KC

That is what I meant by the uncertainty.

One week I went for the highest premium $/Day candidates and they also happened to have only four days to expiration, they were wildly off by Monday morning so I did nothing that week but I learned a useful lesson, go for higher premiums which means longer times to expiration. That reduces Monday morning variability. Unless there are weekend news that change the market's Friday close outlook, we should be fine.

One thing still worries me, what will a bear market do to this new paradigm?

Denny Schlesinger

Danny,

I read with interest what you are doing with your CC Selector. I have been doing pretty much the same for a few months now with good success. I don't know how well this strategy will work in a down market though.

The question I have is what do you do when the underlying dropped a lot. For example, I sold a covered call when MDB was $168 and it dropped to $149 at expiration. Of course, I lost $ for that trade.
What would you do next?
1. Write a new "best" call for MDB even if it may be below your basis?
2. Use a strike at or above your basis?
3. Sell the stock and move on to the next opportunity?

Enjoy reading your adventures in Porto and your insights into Venezuela.

Regards
Charles

The question I have is what do you do when the underlying dropped a lot. For example, I sold a covered call when MDB was $168 and it dropped to $149 at expiration. Of course, I lost $ for that trade.

I don't see how you lost money, you earned the premium and still have the stock. BTW, the only day after hitting 168 that MDB closed at 149 (actually at 147.67) was July 1 which was a Monday. After that MDB closed at 164 on July 19.

But to answer the question, and it's a tough one, the biggest danger is anchoring. So far I have dealt with it on a case by case basis but the logical me is telling me to take the loss if there are better stocks to sell calls on. By protecting one position you are hurting yourself on another.

1. Write a new "best" call for MDB even if it may be below your basis?
2. Use a strike at or above your basis?
3. Sell the stock and move on to the next opportunity?

By the above logic, option 1 would be best if it's a trade worth making, if there is no better trade available, otherwise 3. 2 is anchoring!

Denny Schlesinger
 

BTW, it's Denny with an 'e' ;)

I think the bear market question has two components. I don't think that "taking the loss" is one of them.

1) How will the bear market mentality affect the premium. Will the market pay similar % premium as in a bull market? I would expect that there will be less enthusiasm to bet on similar price rise, particularly for 2 to 6 week expirations.

2) By definition we would have less money to buy stocks in order to sell calls. Same number of calls (?) but with lower strike and lower premium (% of stock price).

Generally speaking, the strategy will yield less income. At least this seems logical to me. I would guess that a 15% correction would reduce income by.... 20%??? A real bear could result in 50% haircut (less money in the pocket and longer hair on the head as we stretch out visits to the barber).

KC