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As you can see, the stock repair strategy has three possible
outcomes: (1) no effect at all if the stock doesn’t move or
declines; (2) a lower cost basis if the stock ticks up; or (3) a
break-even sale if the stock cooperates even halfway.
But what if you set up a stock repair trade only to change
your mind and turn bullish on your stock again? The situ-
ation is salvageable. Let’s say your stock returns to $40 on
good news, and you wish to keep owning it. In that case,
you can close all of your option trades at or near breakeven
(they’ll largely cancel each other out) and continue to hold
the stock.