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  1. phil
    February 27th, 2018 at 11:44 am

    FTR/Jabob – Well, if you have the OOP play, you can lock in gains:

    FTR Frontier Comms. Corp. 1500 1/2/2018 56 $10,725 $7.15 $2.22 $7.15     $9.37 $0.13 $3,330 31.0% $14,055
    Short Call 2020 17-JAN 8.00 CALL [FTR @ $9.37 $0.13] -15 1/3/2018 (689) $-1,875 $1.25 $1.73     $2.98 $0.63 $-2,588 -138.0% $-4,463
    Short Put 2020 17-JAN 8.00 PUT [FTR @ $9.37 $0.13] -15 1/3/2018 (689) $-6,000 $4.00 $-0.43     $3.58 – $638 10.6% $-5,363

    To avoid a lot of damage on earnings, you could cash in the stock at $9.19 ($13,785) and buy 15 2020 $5 calls for $4.20 ($6,300) so that's net $7,485 back in your pocket off the original $2,850 entry means you now have a net credit of $4,635 or about $3 per share vs potential assignment at $8 so your worst case is being re-assigned 1,500 shares at about net $5 ($7,500) and we sell puts and calls again and the best case is collecting another $4,500 when called away at $8 for a total of $11,985 in pocket vs, if you keep the current spread, the max return at $8 is $12,000 so, on the whole, it makes no sense not to protect yourself.

    Same goes for the LTP and I would do that if it were money I were in any way worried about but I won't do that in either of our portfolios simply because it's a huge pain in the ass and they are both small positions we'd be happy to DD if FTR disappoints.



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