When we write a covered call, there is a trader or market-maker buying that call on the other side of the trade. We know that as expiration approaches, the time value of options tends to approach zero (Theta effect). With that in mind I received an email from Marcos in early May 2017 astutely asking why a call option buyer would ever exercise an in-the-money call with little or no time value to capture intrinsic value. As we evaluate this scenario, let’s assume the call buyer does not want to own the stock in a long-term buy-and-hold portfolio.
Reason not to exercise
Exercise and then sale of the stock will result in one additional commission, maybe more
To capture the intrinsic value remaining in this in-the-money strike, the call buyer can sell the option resulting in one commission. To exercise and then sell the stock, to capture that same intrinsic value, there will be two commissions, one to buy the stock and one to sell the stock. Some brokerages will charge an additional or higher commission fee when exercise is involved (avoid these brokerages!).
Reason to sell option
All intrinsic value and any small amount of time value (may be none) is captured and exercise (buying the shares) is avoided (exercise by exception…see below).
Exercise by exception versus automatic exercise
Exercise by exception is the administrative procedure whereby the OCC (Options Clearing Corporation) exercises all in-the-money strikes by the threshold amount (usually $0.01 or more) unless the member submitted instructions not to exercise. This process is frequently incorrectly referred to as automatic exercise ignoring the fact that the clearing member always has the right not to exercise.
When is exercise of in-the-money strikes more likely?
In-the-money strikes may be exercised prior to contract expiration when an ex-dividend date comes up prior to but near expiration and the future dividend distribution will be greater than the time value remaining in the option premium. Let’s view a real-life example for KLA-Tencor Corp. (KLAC). On May 10, 2017, KLAC was trading at $100.16 and the $97.50 in-the-money strike had a published bid price of $2.50 as shown in the screenshot below:
KLAC Options Chain on May 10, 2017
The $97.50 was trading at a published bid of $2.50, all intrinsic value, and no time value component. Next let’s research the ex-dividend date and dividend amount at www.dividendinvestor.com:
KLAC Dividend Information as of May 10, 2017
With the ex-date due the next day, May 11th (yellow field), we see the quarterly dividend distribution will be $0.54 (1/4 of $2.16 in the brown field). In this case, exercise will result in capture of $54.00 per contract above time value ($0.00). This is an example where early exercise (the day prior to the ex-date) is more likely.
If there was a time value component above the intrinsic value, the option holder would have benefitted even more by first selling the option and then buying the stock prior to the ex-date to capture the dividend.
Discussion
Next live events
October 4, 2017
All Stars of Options (just added)
How to Select the Best Options for Covered Call Writing in Bull and Bear Markets
10:00 AM to 10:45 AM
Hyatt Regency Dallas @ Reunion
October 5, 2017
October 9, 2017
Money Expo webinar “Portfolio Overwriting”
3 PM ET: Online event. Alan will be a featured speaker at MoneyExpo, which is the largest online-only premier event for traders and investors across all traditional asset classes. Registration link and information:
October 10, 2017: Palm Beach Gardens Florida:
7 Pm to 9 PM
Using options to Generate Monthly Cash and to Buy a Stock at a Discount.
LOCATION: Publix Greenwise Market (2nd floor)
11231 Legacy Avenue (Legacy Place)
Palm Beach Gardens, FL 33410
The club charges $10 at door to cover expenses.
Market tone
Global stocks were little changed this week as markets digested escalating tensions on the Korean Peninsula and the potential impacts of hurricanes Harvey and Irma on the US economy. The price of a barrel of West Texas Intermediate crude oil rose to $48.95 from last Friday’s $46.75. Volatility as measured by the Chicago Board Options Exchange Volatility Index (VIX), advanced to 12.12 from 10.3. This week’s economic and international news of importance:
- Hurricane Irma, a Category 5 storm is set to make landfall this weekend in south Florida. US economic data is likely to be impacted by the recent storms
- Southern Mexico was shaken by an 8.2- magnitude earthquake, the strongest to hit the country in a century
- The US Federal Reserve’s seven-member Board of Governors is now down to just three members, with Vice Chair Stanley Fischer this week resigning. Nominee Randal Quarles awaits confirmation
- President Trump struck a deal with congressional Democrats to extend the debt ceiling and fund the government for three months while providing Harvey relief funds for Texas and Louisiana
- Markets were negatively impacted early in the week as Kim Jong-un’s nuclear program continued to advance rapidly
- The European Central Bank did not adjust monetary policy at its September meeting, but it did up its 2017 economic growth outlook to 2.2% from an earlier 1.9% forecast
THE WEEK AHEAD
Mon, Sep 11th
- None
Tue, Sep 12th
- UK: Consumer Price Index
Wed, Sep 13th
- UK: Unemployment and average earnings
- Eurozone: Industrial production
Thu, Sep 14th
- China: Retail sales and industrial production
- Japan: Industrial production
- UK: Interest rate meeting
- US: Consumer Price Index
Fri, Sept 15th
- US Retail Sales
- US Industrial production
For the week, the S&P 500 declined by 0.61% for a year-to-date return of 9.94%
Summary
IBD: Market in confirmed uptrend
GMI: 6/6- Buy signal since market close of August 31, 2017
BCI: I am currently favoring in-the-money strikes 2-to-1.
WHAT THE BROAD MARKET INDICATORS (S&P 500 AND VIX) ARE TELLING US
The 6-month charts point to a neutral outlook. In the past six months, the S&P 500 was up 2.5% while the VIX (10.13) moved up by 2.5%.
Our thoughts and prayers are with all our friends who are preparing for the arrival of Hurricane Irma.
Much success to all,
Alan and the BCI team
Alan,
Your KLA-Tencor analysis conflates several issues.
You indicated that “In-the-money strikes may be exercised prior to contract expiration when… the future dividend distribution will be greater than the time value remaining in the option premium”. But you analyzed a call whose bid is trading below parity. That is Discount Arbitrage. You also failed to account for the share price reduction on the ex-div date by the stock exchange.
Discount Arbitrage is different from Dividend Arbitrage. The former is possible for any ITM option that is trading below parity. Dividend Arbitrage is only available if the time premium of an ITM “put” is less than the pending distribution.
Signing off for awhile. Hurricane Irma is likely to be cutting off power some time. Lost it twice for over a week in ’05. Godspeed to all who will be dealing with this monster.
Spin
Spindr0,
I am also taking shelter from Irma. so far, so good.
I have an article in my queue (I have months of articles written in advance for times just like this) that explains the difference between discount and dividend arbitrage. Feel free to jump in when it is published. It will address some of the points you mentioned.
For purposes of this article, my summary is important for retail investors to understand:
Exercise of in-the-money strikes as expiration approaches is rare. If it occurs, it is usually related to an ex-dividend date. The Options Clearing Corporation will exercise all in-the-money strikes by a threshold amount ($0.01 generally but may differ from broker-to-broker) after expiration unless otherwise requested by the holder of the option.
Stay safe.
Alan
Alan,
Five days without power after Irma. Brutal. I can’t imagine what it’s like in Houston.
Regarding your example: With KLA at $100.16 the $97.50 call has $2.66 of intrinsic value. However, the quote is $2.50 by $3.50 which means that if the call owner wants to sell, he will take a 16 cent haircut. If he does, the market maker/floor trader buys it for $2.50, exercises the call and buys the stock for $97.50 for a cost of $100. He simultaneously sells the stock for $100.16, obtaining the 16 cent difference.
The owner of the call can do this himself at any time instead of taking the 16 cent haircut (not just when there is a pending dividend), assuming that his commission structure is low enough to make it worthwhile. This is more feasible at a broker like Interactive Brokers that charges no assignment or exercise fees.
This 3 step execution is Discount Arbitrage and has nothing to do with the pending dividend. The dividend is indirectly involved because market makers are partially discounting ITM options (depending on the amount they are ITM) to account for the pending dividend. Otherwise there would be a free money arbitrage available – and they don’t give it away. If enough call owners who anticipate the dividend sell, it drives the call’s price below parity (negative intrinsic value) and presents the Discount Arbitrage opportunity explained above.
There is no situation where there is a Dividend Arbitrage available if the dividend distribution is greater than the time value remaining in the call’s premium. That occurrence is with the put and I’ll leave it to you to explain that in your future arrticle.
Spin
Spin,
I agree 100%…no dividend arbitrage with calls, only puts. However, as you know, in the practical world of investing, there are retail investors who will exercise to capture a dividend even if it is not in their best interest to do so. For those of us who want to retain our shares perhaps at the risk of serious tax consequences, it is important to understand how to circumnavigate ex-dates. This will be addressed in a future (already written) article.
Glad you survived the hurricane!
Alan
Alan,
IMHO, those who have large cap gains and don’t want to realize them and face the tax man should be ultra careful with call writing because in life, like on my keyboard, Shift Happens. Since I’m not a fan of rolling short calls up for a debit in order to protect paper gains, I’d avoid CC writing on a stock you don’t want to give up (for tax reasons). The market has a perverse way of making you pay for that. I’d sooner book gains and carry paper losses but that’s a bit far afield from CCs.
I’ve had several short option positions assigned early in the past few weeks and that’s a good thing since the money is freed up for redeployment. It’s a fairly rare event but it’s a real treat when a short option with decent time premium is assigned early.
Spin
Premium Members,
This week’s Weekly Stock Screen And Watch List has been uploaded to The Blue Collar Investor premium member site and is available for download in the “Reports” section. Look for the report dated 09/08/17.
Also, be sure to check out the latest BCI Training Videos and “Ask Alan” segments. You can view them at The Blue Collar YouTube Channel. For your convenience, the link to the BCI YouTube Channel is:
http://www.youtube.com/user/BlueCollarInvestor
For all of The Blue Collar Investor community that are impacted by hurricane Irma, our thoughts and prayers are with you. Stay safe…
Best,
Barry and The Blue Collar Investor Team
Hello Alan,
I’m wondering what this means:
“BCI: I am currently favoring in-the-money strikes 2-to-1. ”
I’ve tried to find an answer to it and search through your material and videos but couldn’t find one.
Does it mean you would buy 2 ITM contract and 1 ATM?
Best regards,
Stefan
Stefan,
This reflects my defensive posture I am currently taking in my covered call writing portfolios. If I sell 60 contracts, 40 would be ITM and 20 OTM….a ratio of 2-to-1. I base this on both geo-political and domestic concerns relating to the current administrations ability to achieve its stated agenda. These factors can influence our markets so I’m taking this cautious approach.
Alan
Alan,
Before I found this site I thought that once my otm strikes moved itm, my option would be exercised and I’d lose my shares. Thanks to your explanations of time value and dividends i now understand how the process works and how better to protect the shares I want to keep.
I do have one question I am unclear about. If the option buyer exercises on the ex dividend date, who gets the dividend?
Thanks for all the work you and the team does for us retail investors.
Marsha
Marsha,
The option holder must exercise prior to the ex-date to be eligible for the dividend. If the option is exercised on the ex-date, the shareowners (us) will receive the dividend on the distribution date.
Thank you for your generous remarks.
Alan
Of course best wishes to those recovering from and still managing this year’s hurricanes. My empathy is backed by understanding of what you are going through since I am a Katrina survivor in New Orleans. And a couple more since.
I admit Trump’s deal to take a few worry items off the table for now reduced my bearishness. I had built a lot of cash, maybe for nothing. Friday I re-started the process of getting back in by selling some OTM cash secured puts on a down day underneath things I like. Just starting the cycle over again :). – Jay
Katrina Jay? That must have been intense! I hear Irma has been downgraded, though the media is having some fun with this headline: “Florida Sheriff Warns 54,000 People Not to Shoot at Hurricane Irma” (Defend your trailer park to the last bullet? 🙂 )
Justin
Hey Justin,
Much of New Orleans is below sea level. When Katrina breached parts of the levee system the flooding was swift and catastrophic. Over 1800 people died in that storm many elderly, shut in or lacking the means of escape drowning in their own homes.
A local writer, Chris Rose, wrote an award winning book about it called “One Dead in the Attic”. Many lessons learned from Katrina have been applied to hurricanes since. – Jay
Jay
We understand your situation under Katrina.
We were watching it directly all the time on TV here in Brazil, and suffering the agony of your population with dismay.
Our son Steven is a surviver of Andrews.
He was living in Kendall at the time, right in the eye of that terrible storm. Sitting in the bathtub, scared to death, the whole night , while the condo was shaking and falling apart at some sectors.
He now lives here in Brazil, and is still traumatized from that experience.
Roni
Roni,
Thank you for your personal share about your son and your thoughts some 12 years ago for New Orleans. I still sometimes take visiting friends to parts of the city that never came back. There are remains of slabs next to levees where flood tide washed houses away along with anyone still inside.
And thanks for the kind words below on my latest chat with Mario. You two guys have great structure in your trading staying on top of things with commendable discipline.
Please keep all the helpful well detailed posts coming! -Jay
Jay, What are your pros and cons on writing CsPuts instead of Covered Call?
I realize you do not own the stock with CsPuts but your broker still has to hold on reserve separately the amount Strike * Shares in your account. (The net difference in your cash position plus reserve is Strike*Shares-Premium.)
Since you are buying on Down days, the price will likely be OTM at Expiration so you are not anticipating owning the stock. But if the stock does degrade, you will be getting it at a discount, unless you are forced to Buy it Back because the price declined too much and is not favorable to hold option and own the stock at Expiration.
Before making the CsPut write decision, do you compare the Covered Call Return to see if it is greater than the CsPut Return?
I find the CsPut often less.
Mario
Hi Mario,
I have read the risk profiles of CSP’s and CC’s are the same. I wish I could give you a crisp numbers driven analysis of how I decide between them that would pass your review but I can’t!
I view CSP’s and CC’s as an integrated circle. I never sell a CSP on something I do not want to own at a lower price. Once I own it I start a CC campaign on parts of it as it appreciates.
I am probably patient to a fault. I do not keep score expiry to expiry. I find myself using a shrinking number of tickers for familiarity. And I don’t like high turnover unless it’s just a natural change in trend.
My best YTD example is GLD. I liked it’s prospects but wanted shares at my price, not the market’s at the time. I thought it would come back to me and I wanted to be paid to wait. So I started selling OTM CSP’s on down days. The frozen cash may have been better deployed elsewhere but the return was a hell of a lot better than any one month CD I ever heard of :). I finally got 500 shares assigned, let them run a bit then started covering some. My basis is below market and I now flex how many contracts, if any, I over write each month and at which strikes.
Anyway, thanks for asking. My methods are only that! They fit my style and I am beating S&P which is all that matters. – Jay
Nice… very nice.
Roni
Mario,
The risk profile of a CC and a CSP are similar. When you evaluate them, make sure to account for dividends since they inflate the put’s premium and deflate the call’s.
The return for the CSP is slightly less because of the carry cost which inflates call premium. In order to overcome this, you have to do something creative with the cash requirement. Some brokers permit linked MM accounts, etc.
The main advantage of the CSP is that if successful, you will incur two fewer commissions as it expires (the CC will be assigned).
Spin
PS Take a look at the ATM put and call for near term expirations for AVGO and BBY. Both throw off a dividend on 9/18 and you can see how the pending dividend is making the short put appear to be more attractive than the covered call.
Alan:
In your book, The Complete Encyclopedia, on page 345 your strike selection for portfolio overwriting says that the underlying share price should be at least 5% lower than the strike price with the option premium generating 1 to 1.5 % monthly return.
In the July Blue Hour presentation you have lowered the monthly premium requirement to 0.5% (6% yearly). Is the strike price recommendation of 5% over the underlying stock still the same? Why did you lower the premium requirement?
Pete
Pete,
Both publications are examples of how Portfolio Overwriting should be structured based on market volatility, personal risk tolerance and initial premium goals. Whether our goal is 1/2%, 1% or 1 1/2%, the structuring is the same: Ee use only out-of-the-money strikes and go as deep OTM as possible and still generate our initial monthly return goals.
In 2011, the market volatility as measured by the VIX moved above 30. Today it’s about 10 so premiums and risk are not as robust as they were 6 years ago.
The Blue Hour webinar you viewed enhances the information in the Complete Encyclopedia. I am almost finished writing another book, co-authored with Barry Bergman, on “Covered Call Writing Alternative Strategies” and 1/3 of this book will be dedicated to Portfolio Overwriting.
To sum up: We set our monthly goal and then select a strike based on that goal that allows us to go as deep OTM as possible.
Alan
Alan,
Your videos have been really helpful for me in understanding covered calls.
I have a question on OTM covered calls,For example,
I have purchased a stock for 28$ and sold a OTM for 30$ for October 20 as expiration date,what if the stock reaches 31 $ on October 1st (Making it ITM)will the option will be exercised at this point?
My second question is what if stock tanked down to 29$ on expiration (October 1 st it was 30$)?
Thanks,
Nagesh
Nagesh,
Options are rarely exercised prior to expiration. This is because premiums have a time value component that will be lost if the option is exercised. In your example, if the stock trades at $31, the premium for the $30 call mid-contract will be $1 (intrinsic value) + a time value component, let’s say $0.50. Exercise will result in a benefit of $1 (buy at $30 and sell at $31). The option holder can simply sell the option and generate $1.50 credit.
If the stock expires lower than the strike (strike out-of-the-money), the option will not be exercised.
Alan
Just got back my Internet!
The article below regarding “Blog Comments in your email feature” I posted by accident in an old Blog so I am re-posting it new for this week.
****
Here in Tamarac, FL I am in recovery mode. I am one of the lucky 20% in Broward County that did not lose power, but lost Cable and Internet for 24 hours. Cellphone Internet was fine. Discovered this morning half of one of my large mango trees broke up into the street and not my house, since I was lucky we had winds coming from the Southeast the way Irma hit Florida on the west side of the state. Spent the morning cutting it up with also the help of a friendly neighbor who was an experienced Machete user. I wish the best outcome for any members in Irma’s path, which is still affecting many..
****
Justin:
Advantages of Blog comments coming in your mail:
A1. It simplifies your life if you can get the Blog comments to come in your email.
A2. You can delete the email after reading the text. Gmail throws them away automatically after 30 days. (You can also force deletion immediately, if you wish)
B1. You can mark those comments important to keep
B2. You can mark those comments you can’t to revisit later.
B3. You can mark those comments you do not have the time to read.
B4. You can mark those comments you want to reply to later
C. You do not miss any replies that are buried in earlier comments.
D. You do not have to visit BCI site and search for replies to old Blog entries.
Gmail:
I finally figured out a simple system with Gmail to mark
my emails. I have always had problems on how to mark my
email with a system I could remember and use effectively.
I use a green-check for completed emails. Yellow-Star for
review later for less important items. Red-Star for Hot
items to get to later (replies, reviews, important to
keep. In Gmail settings you can just enable those flags
and in what order then can appear.
For example I can search gmail for “BCI Has:Red-Star” and
all the BCI emails I need to reply or review or important
to keep are selected. Search for “has:red-Star” and I get
all my important action items or important to keep.
Search for “has red-Star -put “bearish market” and I get
all emails which are important for reply or review that
does not mention the word “put”.but does mention the
phrase “bearish market”. Result was a January 24, 2016 BCI
email from Alan Ellman on Covered Call writing Inverse
ETFs in extreme bear markets.
Mario
Mario,
That’s an impressive list! For myself I just glance at the BCI site once or twice a day. Info/comments I find useful I copy and paste into a single Word document – it runs to quite a few pages now.
Well done on surviving Irma – I’d be more concerned now that I had an “experienced Machete user” for a neighbor, though he at least sounds friendly – hopefully he wasn’t one of the 54,000 pumping lead into the sky 🙂
Justin
Mario
Good to hear your luck with IRMA.
I was watching it closely and was releived when it lost some wind force when it hit Florida.
Still, it must have been a tough few days for you.
Roni
Alan,
As I get more comfortable with BCI investing, I am increasing the value of my covered call portfolio. I started out with 5 stocks and corresponding call options, in 5 different sectors of the overall market. As I gradually increase the dollar amount invested in my covered call portfolio from $100,000 up to potentially $1,000,000, should I also be increasing the number of stocks owned and their corresponding call options?
Thanks,
Dave
Dave,
The more positions we hold in a portfolio, the greater the diversification and the lower the risk. The actual number of positions will depend on each investors comfort level in managing these positions. For me, my comfort level is 15 – 25 positions and 50 – 100 contracts per month (plus a few in my mother’s portfolio). Others may feel comfortable managing more or less positions. With a portfolio between 100k and 1 million, 5 positions is not adequate.
You are going about this the right way, gradually increasing you positions and portfolio size as your comfort level and confidence grows. You will know when you reach your maximum level.
Keep up the good work.
Alan
Alan,
I have been asking myself the same question posted by Dave.
Gradually increasing my trading investment?
To manage more than 15 positions would be difficult to me at the moment, but, maybe increasing the number of contracts, or trading some higher priced tickers could be an advantage? Or not?
Roni
Roni,
I would consider the following guidelines:
1- Increase the number of positions to enhance diversification until our maximum management comfort level is reached..
2- As portfolio cash value continues after the number of positions has been established, start increasing the number of contracts-per-position
3- Always factor in asset allocation where similar cash amounts are dedicated to each position. If we are allocating $20k per position, a $50 stock will result in 400 shares and 4 contracts while a $60 stock will result in the purchase of 300 shares (rounded down from 333) and 3 contracts.
4- As portfolio value increases, pricier stocks will be eligible that may not have been considered when cash available was much less. However, a stronger, lower-priced stock should be given priority over a high-priced, weaker candidate.
Alan
Alan,
thanks for the very appreciated guidelines.
My personal risk tollerance is much higher when allocating more cash to the stock market, after adopting the BCI methodology, and having concrete proof of it’s long term consistent results.
On the other hand, my risk tollerance for each individual trade, remains unchanged, very consrvative, and almost totally devoid of emotion.
Roni
Alan,
Just re your #3 example there, do you ever allocate a higher percentage of capital to a position if you think it’s an unusually
good deal?
Justin
Justin,
From a cash allocation vantage point, I will rarely veer from this guideline. However, the option strike is directly dictated by favorable market and technical factors. If a position looks particularly positive, I use strikes deep out-of-the-money while still achieving my 1-month initial return goals. For example, if my goals in a bull market are 2-6% for initial time value returns, I will favor a 2% premium return with the possibility of substantial share price acceleration.
For those of us who follow the BCI methodology, all stocks and ETFs in our portfolios have bullish fundamentals and technicals.
Alan
Alan,
I need you to clarify this statement which you have used in many responses? I am still confused on what you are actually saying.
“For me, my comfort level is 15 – 25 positions and 50 – 100 contracts per month (plus a few in my mother’s portfolio).”
When you say 15-25 positions, do you mean the 15-25 positions are each a contract position, with different, not repeated stock symbols. Then when you say 50-100 contracts that you write 50-100 contracts (CSPuts or CC) against those 15-25 different stock positions,maybe laddering them (ITM, OTM) in the proportion of ITM versus OTM for the current month.
I gather you are distributing these positions over multiple brokerage accounts.
****
To describe my count, I have 5 accounts, qualified / qualified in 2 brokerages, including 1 joint trust account.
For this month I distributed over the 5 accounts 23 contract positions (almost 5 per account) (CsPut or Covered call) using 11 different stocks. Many of the contracts are repeated in at least 3 accounts. Using your vernacular, is it equivalent to say I have 11 different positions with 23 contracts? That is my confusion.
To get fully invested I add a contract that just fits into the remaining usable cash in an account, so I end up at least 90-95% invested at the end.
I have had this problem in describing positions when I read your Encyclopedia, so I want to see if I can clear this up.
Thanks,
Mario
Mario,
15-25 positions: I have 3 portfolios dedicated to covered call writing. The total number of stocks and ETFs is between 15 – 25, closer to 25 so I may average 8 underlyings per account.
50 – 100 contracts, closer to 100: This aspect will increase as my portfolio net worth increases. This means that if I hold 25 underlyings, I will average 4 contracts per positions and yes, it may include laddering strikes.
I also manage a small covered call portfolio for my mother.
I also have been managing a fairly substantial real estate portfolio which I have been gradually closing out so I can dedicate more time to our BCI community (more books, calculators, trading tools etc. coming) first and my personal stock portfolios second.
Alan
Alan,
Just a quick question: in this video of yours:
https://www.youtube.com/watch?v=hlM5mB-DwtU
Understanding options basics is critical for successful covered call writing. Once mastered, the practical application becomes second nature. For a real life example …
at time – 3.29, you mention an example – why would you want to buy a stock for $32 and agree to sell it as a $30 call option?
Isn’t that gong to lose you money, hoping the stock depreciates before expiration date?
Thanks,
Robert
Robert,
We do not automatically lose money when selling ITM strikes. The premium these options generate will compensate us for the difference between purchase and sale price ($2) in this case + a time value component which represents our actual initial profit. If the total premium is $3, $2 compensates us if the option is exercised and $1 represents our initial profit. We can lose money if share value falls below $29 (the breakeven) by expiration but we always have our exit strategies to mitigate in these cases.
Alan