Fix Broken Trades With the Repair Strategy

Robert Morse said:
No Problem. I'm no longer interested is assisting you in learning the terms and possible P/L from different strategies you read online. You think that is learning trading. It's not. I've done my best to patriciate in most of the threads you started, I will not forward because it does not seem like you listen to advice. Good luck to you-Bob
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I didn't ask for any advice, nor asked for assistance.
I just had posted a link that I found on the net and thought it might be interesting for ET readers.
You funny folks have really a funny kind of group-thinking. :)
You are right and everybody else is wrong. Yes, got it! :)
 
Quanto said:
https://www.investopedia.com/articles/trading/08/repair-strategy.asp
"
Fix Broken Trades With the Repair Strategy

By JUSTIN KUEPPER, Updated December 24, 2023
Reviewed by SOMER ANDERSON
Fact checked by YARILET PEREZ

Investors who have suffered a substantial loss in a stock position have been limited to three options:
"sell and take a loss," "hold and hope," or "double down."

The "hold and hope" strategy requires that the stock return to your purchase price, which may take a long time, if it happens at all. The "double down" strategy requires that you throw good money after bad in hopes that the stock will perform well.

Fortunately, there is a fourth strategy that can help you "repair" your stock by reducing your break-even point without taking any additional risk. This article will explore that strategy and how you can use it to recover from your losses.
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Man, you need to get your head out of your ass and face the reality like a real trader. :D

So let's pretend that you do exactly as mentioned in your article, which is:

Let's imagine that you bought 500 shares of company XYZ at $90 not too long ago, and the stock has since dropped to $50.75 after a bad earnings announcement.

Constructing a repair strategy would involve taking the following positions:
  • Purchasing 5 of the 12-month $50 calls. This gives you the right to purchase an additional 500 shares at a cost of $50 per share.
  • Writing 10 of the 12-month $70 calls. This means that you could be obligated to sell 1,000 shares at $70 per share.
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But WTF??!! That garbage stock is now trading at $30! Oh wait, I did forget that you collected a measly amount of premium. That must be a real relief. :rolleyes:
 
schizo said:
So let's pretend that you do exactly as mentioned in your article, which is:

But WTF??!! That garbage stock is now trading at $30! Oh wait, I did forget that you collected a measly amount of premium. That must be a real relief. :rolleyes:
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How do you get $30? It clearly says $50.75. You blind, (wo)man? :)
And: I'm not the author of the article. I just posted the link.
 
Quanto said:
https://www.investopedia.com/articles/trading/08/repair-strategy.asp
"
Fix Broken Trades With the Repair Strategy

By JUSTIN KUEPPER, Updated December 24, 2023
Reviewed by SOMER ANDERSON
Fact checked by YARILET PEREZ

Investors who have suffered a substantial loss in a stock position have been limited to three options:
"sell and take a loss," "hold and hope," or "double down."

The "hold and hope" strategy requires that the stock return to your purchase price, which may take a long time, if it happens at all. The "double down" strategy requires that you throw good money after bad in hopes that the stock will perform well.

Fortunately, there is a fourth strategy that can help you "repair" your stock by reducing your break-even point without taking any additional risk. This article will explore that strategy and how you can use it to recover from your losses.
[...]
"
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.... and it might take days/weeks/months to repair your broken trades.

And as you wait for it to be repaired,
you keep on suffering from insomnia/countless sleepless nights.

For goodness sake, go cut loss, and move on with life.


Full details here
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Quanto said:
How do you get $30? It clearly says $50.75. You blind, (wo)man? :)
And: I'm not the author of the article. I just posted the link.
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And you're not blind? What makes you so sure the stock will bounce back up?

Pros don't dig their own graves. They wouldn't allow losses to grow in the first place. Only amateurs allow the hole to get so big that it swallows them whole.
 
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It's an interesting alternative and it's not perfect for every possible outcome. It's also a viable exit strategy to establish a possible exit price. It's also really interesting when done in CS index options.
Nice alternative to covered writing without the downside cushion.
It used to be referred to as "Forget the cheese and just get me out of here".
You double the move between the two strikes. It becomes especially attractive with OTM skew.

If you want to keep the upside then do the fly and pay up.
 
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