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Whether you are a seasoned trader and investor, or new to options trading, and investing, we have created this podcast for you. We have packed each episode with actionable strategies, tips for success and analysis to help you gain confidence in your trading.

 

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Watch and Learn from Sarah and TJ every week as they share their trade set ups, market analysis and most importantly, tips to help you trade better than ever. Each episode will share the realities of trading options and the markets. You will hear tips and tricks by retail traders, for retail traders. Yes, finally a show that delves in to trading for people just like you!

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Sarah: Hi, everybody this is Sarah Potter from the SCT podcast. We are at episode #27 and I have TJ here with me.

TJ: Hi, everyone.

Sarah: So in today’s podcast, we are going to talk specifically about adjusting, and rolling trades. Doing something with trades, if they haven’t really worked out the way you wanted them to. We’re going to talk about how and why you want to that. So first off TJ, I hope you can explain a little bit about what is the difference between using the term adjusting or rolling when it comes to trading?

TJ: Well, I think they’re pretty generic terms and different traders will use them differently. Usually for me, rolling is taking the same trade and moving it out to a different expiry date or a different strike price. Whereas, adjusting is changing the trade a little bit. So adding a leg, adding some stock to the trade, for example, to turn a short call into a covered call. Something like that where you’re changing what you’re doing, changing the intent of the trade.

Sarah: Yeah, you’re so right. I find that in trading, it’s kind of hilarious how everybody takes a different spin and take on different terms, I do find that a little interesting. I agree, so when you’re doing an adjusting and rolling, they are a different way to look at a trade but ultimately, what you’re doing is looking at an existing position that you have open, and trying to make a decision about whether or not you need to add some more risk to it to have a more favorable outcome than you have now. So TJ do you roll trades and when do you decide to do that?

TJ: Typically, I won’t generally roll a trade because most of the trades I’m doing are in weekly options and I’m only in a trade for maybe three days, four days. So we can adjust the trade or roll the trade but there’s not a lot of time to do it. So generally those weekly trades, we’ll just exit for the loss and regroup either back into an option in a few weeks once the chart pattern gets back to where we like it, for a new entry or we just get out for a loss and move on. And I think what we have to remember too and a really good point for any trader, is that no matter what you call it, adjusting or rolling. It’s placing a new trade, it’s adding risk to the trade, you’re adding an additional, potential of loss in hopes of making back what you lost on the first leg of the trade. But it is a new trade and it is adding risk so you really have to ask yourself, is that something you want to do? Is it better to take a small loss and walk away or is it better to potentially take a medium or large size loss with the hopes of winning back that initial loss. So for the short trades, no I don’t. I usually get out and move on. For some of the longer term long puts and calls, covered call position, protect puts, yes. And even if it expires three or four weeks out or longer is much easier and a much better candidate for adjusting or rolling and yes, on a case by case basis I will. I don’t think there’s any point of extending a trade for months or weeks or even a year or so just to break even at the end. I think it’s stressful mentally and stressful on your wallet a lot of times. What do you think about adjusting versus rolling do you do it? What’s your opinion Sarah?

Sarah: Well my opinion at the very beginning is I don’t ever really want to be doing that. That is never my goal in the trades and I think that is something that’s important to point out. There are strategies out there in the market that basically somebody is setting up the trade and their plan is to adjust as they move through that strategy and that’s really not something that we do in our room and I’d say that we’re both the same way that way. When we’re originally setting up our trade and deciding where we think something is going to go, choosing a strategy, the strike and the timeline accordingly, we’re looking to hit the home run. We’re looking to actually hit those targets from the beginning without having to adjust versus there are some strategies out there where when you place the trade your plan within the timeframe that you’re still in the trade is adjust the legs on either side. So we should mention that that is one strategy altogether. I don’t do that. For me if I’m going to adjust or roll a trade, I will do it occasionally. The only real times that I’m really even going to consider it is when I can still look at the underlying. I’m still going to look at a stock for example, and say yes, I still think things are moving in the same direction than I originally thought when I placed the trade. But along the way something has happened but now when I’m towards the end of the trade my assumption of where I think something is moving is still the same from the beginning I’ve just let’s say, ran out of time. So sometimes, if I still think the stock is going to be moving higher but my option is about to expire or time is influencing too much the price of the strike that I’ve purchased, I might have to roll that trade out or adjust it a little bit so that I have more time. So I will do that. I also will keep in mind how the market’s moving. So in fact if I look at my trades over the last couple of weeks, I actually have adjusted and rolled a couple. I think there’s specific links to why I’ve done each of those trades. I mean in the trading room we’ve talked specifically, because I always do that whenever we’re in trades, I always go through each one of the trades in the room and we talk about why we’re managing some, why am I exiting some, why am I taking profits here, and all that kind of things. But if I look at some of those the reason is one through earnings, so sometimes if I want to take advantage of an earnings announcement and let’s say I’m in a long position and the stock hasn’t popped out yet but I think that earnings is going to make that go a bit higher so I roll because I want to be involved a little bit longer. I will shift the trade. Again, making sure though that my assumption continues to be that I think things are going higher and so I’ll take the time and buy a little bit further out in terms of expiry to now take advantage of something like earnings. I will throw those on sometimes. And then also, if you’re in a trade, and let’s say it’s a couple of weeks out and we’re sitting in that trade and we’re waiting, and waiting and it hasn’t popped up yet but think it’s going to and all of a sudden one day there’s something that has happened that moved the market that wasn’t anticipated. So sometimes like some news events or something that has really changed the tone of the market, then I look at that stock I think okay that day alone really changed the move so let’s say it sold off quite a bit but I think it’s coming back quite strong very quickly. And so as long as the underlying assumption is still true, I still think it’s long, I will roll the trade out again. That’s an example of when I would also roll because I think again, it’s just time that I need on the trade as opposed to strategy. Now, if we talk specifically about adjusting TJ would you say you do more adjusting or rolling more often?

TJ: I do more rolling. And I agree with the premises. Usually, when I’m rolling it’s for extra time. So the stock is behaving the way that we wanted it to however the option, the expiry date that we chose is coming up really quickly. Trend is still there we just need to buy ourselves, literally, buy ourselves a little bit more time in the trade and just extend that allowing us to be in a winning trade. We’re not going to extend for time as if the chart pattern looks completely different than when we entered the trade and then a lot of people use rolling just to extend, extend, extend and kind of deny the fact that the trade’s not working but I think a lot of times it’s just like a bandaid you just have to rip it off the faster, the better and move on. Time that's a really good candidate that we've used with success. A number of times in the ETF, USO, it's a really inexpensive ETF trading anywhere right now kind of between a $9.50 and $11. You can pick up options pretty inexpensively on USO and you can look to, if USO makes a move, percentage wise you're looking to probably make 50-100% on that option's trade. So you're looking to turn that 15 cent option into a 30-40 cent option. And so in that case because you're looking for that to double or a little bit more price of the option you can afford to take that a couple of times. You can afford to adjust that trade a couple of times and still know that okay USO is in a really good trend. We just need some more time. So for example in a USO's bottoming out and I'm buying the call it slows down for a little bit and you know they say the $9 or $10 call that we have in the markets move sideway since we got into it. You know if I paid 20 cents for it, and I'm looking to get 40 or 50 cents out of it when I sell it then I can take that 20 cent trade I can take it twice and break even or more or do better on that trade. So I think there's some stocks in ETF's that really lend themselves to it and for me it is inexpensive ETF's or stocks that can move a large percentage in that USO is that one that we've adjusted with quite a bit of success.

Sarah: Yeah, you have done well with that one. So how many times would you roll something. Like at what point is it just too many times?

TJ: I think for USO I'd probably take two tries at it. Especially now, how the charts are pretty well kind of locked between that 9.50 and 11 dollar range is if you're buying a call at the bottom at 9.50 or you're buying a put up at 11, you're usually still in the same trend. So I'd be buying my call and usually what happens is it's not moving fast as we thought was going to so I'll extend it. If it reverses for example, if I've bought the call at 9.50 and then all of a sudden USO's trading at 8.75 or 8.50 I might take one more shot at it because it's just broken through support and we might get a bounce but that's about it. If the trend is changed, I'm not going to keep reversing my position on it just to kind of hold on the trade.

Sarah: Okay, I agree I usually find two rolls is really the most for me where, okay I just have got it wrong at that point. So after two times it's just I need to move on from the trade or take a sign with the stock maybe. But I have got something wrong here and it's like you said, time to pull off the bandaid. So that kind of brings me to a good question that I think people want to hear about is, when you start rolling or adjusting, whatever you're doing, are you at that point changing the goal of your trade to just break even or are you rolling and adjusting and you're still looking for a reward or profit on the trade?

TJ: Yeah, I think that's a really good point too and that I hadn't really thought of that too. And it's a lot of how I trade and what I talk about is well is that when you are the premise for me when I adjust or roll is to make back the loss. So I'm looking at if I've lost, say 30 cents on a trade, I'm looking to exit the next trade the adjusting trade at around that 30 or just a little bit more. I'm really just trying to break even, cover commissions, get out of the trade for 0. I'm not really looking on the second trade to go in and double up or triple up on that second trade and I think that's where a lot of people end up losing in adjustments because they see the profit, they've broken even and then they're trying to make money on that second trade and I think a lot of times, they're trying to make too much and it ends up retracing and they end up losing twice. So I don't know, why Sarah do you think that? why in trader's minds and I've asked myself this and I've asked room too, it never really got a great answer is, why don't people think adjusting or rolling is taking a new trade? Why do they talk about it like it's just extending in it has zero risk proposition with only gains to be had?

Sarah: You're so right actually. Sometimes I think probably because it's another term and I think we hear from brokers a lot like, let's just put out on the table that when you're all trading, were trading through brokers and what do brokers want from all of us? They want us to trade. And so sure they want to trade too, they want to make money, we want to protect our profits, we want to limit our risk, and of course everybody's looking for that one cash cow of a trade out there but we also do hear from brokers a lot that say, that explain rolling and adjusting as not necessarily a new trade but giving that first trade a second chance. And I think it actually relates to who we are as people and I just want to throw trading here on one side. Also look at everybody as a trader and the psychology of it all. I think every time any of us place a trade, we want to give things the benefit of the doubt. That it is going to work out. We all want something to be okay. We never want to set up something for failure. And I think sometimes when you're trading, it's important to be very conscious of that because when we start making those assumptions and thinking oh gosh I really hope it works out, this has to work, this has to work. We've really moved away from rational decision making that you need to make in the trade. And I think people just jump to this idea of it's okay, I can adjust. I can roll and it will just hide that and I don't have to deal with that right now. I can just move it out a little bit further. And I have to say that might be good in the short term but in the long term that can really bite you. I don't know if I'm allowed to say bite in the ass but it can really hurt you. And sometimes like you said, taking the band aid off quick or slow either way it's going to hurt. So what's the best way to actually get back on track? And sometimes because we hear from brokers about how it's okay we can hide this. It's okay, we can move on. I think people stop remembering that it actually isn't a new trade. But I like what you said, I think that's actually a good way to counterbalance that. So a solution into thinking that way is when you do start adjusting or rolling, rather than now looking for profit, is you're just really looking to break even to make back some of the loss and to cover commission. And that's another thing too here. We haven't really talked about that and ‘commissions’ can be another good podcast down the road. It's just talking about how conditions influence trading and that's another topic that we really don't hear about very often but it affects us every month and it affects our bottom line because we are all retail traders and we're paying commission. Let's mark that down as an actual theme to do cause I think that would be a good discussion. And I think that leads me into another idea that I wanted to make sure we're talking about, is that when we're adjusting and rolling, there is no undo button and I think that a lot of traders wish that once they start getting into adjusting and rolling that they're, secretly in their minds, they're thinking there's an undo button. And I would totally admit, I have trade right now that I wish there's an undo button on. So here's an example of a trade that's not working now, with you guys we're completely open and honest about trades, so here is one with DG I am in. I bought a call. It was long in position and then DG sold off. So I decided while I'm going to make an adjustment to that trade, I'm going to sell 72's and hold on to my 74 long position. So essentially creating a credit spread. And then lo and behold, what happened today DG shot up through 72. Like oh my god, man, where's my undo button? I didn't have it. So speaking of adjusting and rolling, I'm actually working on an example right now in DG and making the decision about what do I want to do moving forward. So let's take the same tips that we just discussed in the podcast and add that into this specific example. So right now when I'm in DG and the price of it is higher than the strike of which I sold. I have to make a decision about where do I think that underline is going. Where do I think that stock DG is going to move as it expires tomorrow. And so right now I'm actually holding the 72. I've been paying a lot of attention to how it's been pricing especially into this afternoon and that's really important when you're trying to decide whether to adjust or roll make sure you take good look at that options chain. Really look at and get a good feel for where is volume coming in, where are people lining up on that options chain, where do they put the stakes in the ground about where they think things are going. Use that information to help you with your trade to decide whether you want to adjust or roll. That's very helpful. And make the decision about okay I don't have an undo button here. I already adjusted the trades so I was long to 74 I added short the 72, what do I need to do now moving into tomorrow? For this specific example, in my mind tomorrow I'm going to evaluate; do I want to look to take an assignment on anything? If something has value, do I want to look for that assignment piece so I might be short in the stock if I keep this short position on or do I just want to get rid of the whole thing and say yeah, this is just a small loss and we'll just get out of it.. Do I want to get rid of just the 72's that I sold? So we're going to go through all that scenarios in the live trade room because I think that's really important. But for all of you in the podcast as well I hope you go through a same process of looking at a position you're in. Something I adjusted. I don't have an undo button. I was wrong about the direction that I thought something was moving and so as I move into tomorrow that is the end for me. I tried doing an adjustment on it. I am not going to go out any further. I confess up to it and say yup I got out of four or five winning positions this week and this one isn't working and that's okay. And I'm not going to continue the risk on this by rolling this out any further. I was wrong, I tried it once, I didn't get it so I have to make a good rational decision to say tomorrow's the end of this trade. Even though I have the ability and the broker's little light will flash and say hey you can do this. I'm not going to do that I have already made that choice one time and it's time to move on to look for other trades that can make me money. Cause I can make more money in the market being focused on the right trade rather than spending too much time on trades that are wrong. I don't know when you look at trades do you ever have a point where you're like I just have to stop here.

TJ: All the time and it's usually you try once, you try twice and then it's time to move on to something with better opportunity and not dwell or focus on the one trade or two trades of eight or two trades of ten that didn't work. Right? We're always focused on that one or two that didn't work when there's seven or eight or nine that have worked really well. But we're still well, like you said, as humans focused on that and I think, I don't know, I'd like to leave this with kind of a thought too and goes along to the last point in it. I think thought it was a really great point was if I'm taking a second. So for example, I have Apple. I take one trade, it doesn't work, I adjust it or roll it, and I'm looking at that second trade. Why does that second trade have to be an Apple? Maybe there's a better opportunity in a different stock in Google. So why do I have to stay in Apple just because I started trading in Apple? Maybe there's a better opportunity and I can make my loss back in a different stock and I think that's what we have to remember that like you said just because there is that rolling button on your brokerage that makes you that one click roll, doesn't mean you need to use it. And you need to really evaluate at the end of the day, is it better to stay in the original stock, and I think there's opportunity there. Or is there more opportunity somewhere else where I can make more money and I think that's kept me on the right side of things for many years.

Sarah: Those are wise words my friend and I'm sure all of you guys listening to this podcast can absolutely relate to this feeling because this is something that we all deal with. And I hope this has been really helpful for you to hear a little bit about how we evaluate trades and what we basically do with them when they're not working. I think it's sometimes really easy cause we are shorter term traders and we have so many profitable trades that sometimes a lot of the learning can come from trades that don’t work and so happy to talk through all of that. So great podcast today I think this was really helpful for everybody. We would love to hear from you though. So one is, send us an email podcast@shecantrade.com if there's a specific theme that you'd like us to talk about moving forward we're happy to take all of those pieces of feedback and then also please post a review. The reviews are what really helped build this podcast up and helped other people benefit from the learning that's here. So please review the podcast. Look forward to seeing you guys all guys next week and happy trading everybody.

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Sarah: Hi everybody. So excited to be back. This is the re-launch of the SCT podcast. So as I said, I am really excited to have all of you involved and I just wanted to let everyone know because I did have a lot of questions about why we stopped the podcast and what was going on and just to let everybody know, I have just had a second child and so, between everything that we were doing, this was something that did need to be put on hold, but we are all back again and we are actually going to take a little bit of a different approach to the podcast, which I am pretty excited about, we are going to talk about that today. So first things first, I just want to introduce TJ here, we have TJ now being part of our podcast. So do you want to say hi.

TJ: Hi guys.

Sarah: And I think this will be a really nice perspective moving forward because it will be the two of us so we will be able to discuss different perspectives a little bit more about trading. Certainly trading is all about everybody’s different perspectives and remember for any trade to actually happen, there has to be a winner and a loser, there has to be an exchange of two people’s ideas. So it will be really helpful for us to have more conversations moving forward or even debates about strategies, ways to approach the markets and really how to benefit and get as much out of the market as you can. So really excited about the podcast moving forward and also wanted to talk to you a little bit about how things will change. The biggest thing moving forward is that we are going to focus on one theme per show. We got a lot of feedback, where everybody really liked all the content we had in the previous podcast series but sometimes we talked a lot about the things each show. So, what we are going to do now is pick a theme and from that theme we are really going to focus on trading tips, trading lessons, how to improve, what you can pull out of the market, finding better trades, that kind of things. So, this is my request from you, We need to hear from you guys about what are different themes you would like to hear us discuss in this podcast. So you can email podcast@shecantrade.com. What we have done moving forward for the next few weeks is that we have certainly collected a lot of feedback from all the emails we have gotten for a while and we are going to start working away on those and we want to continue to hear from you. This podcast is really all about you guys. We do this so that we can share information and have great real conversations about the markets and the best shows really come from hearing the feedback from all of the listeners and the viewers. So speaking of which, we also need to have your reviews, your reviews really make the podcast and help raise awareness about what we are doing here. So please make sure that you are giving us an honest review about this podcast and as I said, really excited about the re-launch. So TJ, do you want to tell us a little bit about, do you want to talk to them about when we will be releasing it, what dates to expect the podcast.

TJ: Yeah, absolutely Sarah. So the podcast, we are going to get it out every week, it will be released on Thursdays and it will be a new topic, great discussions, hopefully you guys subscribe on Itunes or on your favorite podcast network and yeah, check in every Thursday for brand new content. So, with the markets the way they are, I think there is lots and lots of content we can talk about, had a really great time trading a last couple of months. Definitely ever since November, it’s been an awesome market, so Sarah do you have any favorite trades that you have done in the last couple of months?

Sarah: Yeah, I mean, it’s true. We haven’t done the podcast but we have still been trading and the live room has continued as well as texting service. In fact, I started trading four days after having my second child, so really got right back to the market right away because there were so many trades out there and in terms of actual stock picking, I continued to really like the high bid of stocks, so pretty well, if you could recognize those stocks, those names. I like those. And then also, I continue to like stocks that have a lot of history and I find that sometimes some of the stocks these days especially new stocks or IPOs come right in the market quickly and can be a little challenging to figure out where they are moving. I definitely like to look at the history of stocks to figure out how I want to trade them. So if I look back on all of them and still probably and lots of the big names that you recognize, Apple, Facebook, Netflix, those are all really great. How about you, what are some of the stocks that you have been doing about the last little bit.

TJ: Yeah, I would agree with you although, I think I have fixed them really, we have been doing some really different things, like with a lot of the stocks that we have been looking at, some names, some smaller names on BIDU, IBM as well, selling puts, straddles, credit spreads etc so I am really trying to mix it up. The market is a lot different now than it was six months ago. And I think the best thing is that I know from personal experience is you can’t get too caught up in anyone’s strategy. You really need to be flexible and adapt to what the market is bringing. Sarah, would you think this can happen in the next couple of months, next couple of weeks.

Sarah: Well, I think it’s really hard to project and moving forward in terms of the market, as you guys all know I always talk about how it’s not about me guessing or something is going couple of months down the road, I want to pay attention is what’s happening that day so that I am making appropriate trading decisions. So, yeah it’s really just about what things are setting up within that week and then trying to place trades that time.

TJ: So would you think you kind of leaving somebody with a great trading tip this podcast, what would your number one tip be going into next week?

Sarah: I will probably leave everybody with a tip that I think is pretty crucial and is really not about just useful for next week, I think it’s kind of relevant for any week. And what I think I would probably leave everybody with, is the idea of ‘what a trader is?’ So if you think about the work “Trader” it’s really an umbrella term and there is all sorts of different types of traders, all sorts of different market and then I think whenever I was searching for trades all the time, we got to see how the market is moving, sometimes people forget that a trader is still somebody who doesn’t trade as well. So, it’s important to have really good trades, smart trades to understand why you are entering into trade, Why you are staying in a trade?, Why you are getting out of the trade, and you don’t want to just place trades to place trades. So it’s really important that everybody is always gathering evidence, the market is always going to shift and always going to change. It will always provide opportunities to trade and it is up to us as traders to evaluate which one is the best one and which one we should wait and leave aside, I think that’s my tip moving forward. How about yourself? Do you have a tip for everybody?

TJ: Yeah, I think the tip is to follow the market and what the market speaks to you. It goes along what you said too. I kind of agree more is that, definitely catches the positions. Sometimes it’s better not to trade, but I think just letting the market speak to you and following what the market is doing and not trying to guess where in unpredictable times and we need to make sure that we are trading what we see today because in two days, it can be completely different. Also making sure that we live out at our risk and that we are taking the right risks for the right reasons.

Sarah: Right, good tips. So that is really exciting or should I say this whole podcast release is really exciting and I am looking forward to our weekly podcast and as I said moving forward, our new style and approach is going to be a little different, so stay tuned, every Thursday this podcast will be released and we will be basing it around one theme in the market to make sure that you are all getting a lots of information each show. So please subscribe, review and we will see you on Thursday. Take care everybody.

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We have rounded the turn on our first six months of the SheCanTrade Podcast with Sarah Potter, and we begin the second half of our first year with a look at the market, which Sarah feels is due for a slight pull back….and then she makes a prediction what will happen when the S&P 500 Futures Index re-approaches the 2100 level of past resistance. Listen to find out what Sarah thinks could happen sometime this year! Also, we resume the coaching program with co-host Thomas Miller, who has been doing his trading homework, and is adopting one of Sarah’s favorite patterns in a commodity market. Fasten your seat belt for a fast ride and learn one of Sarah’s key market direction indicators and short-term timing methods as well. Sarah is an excellent coach and it appears Thomas is becoming a pretty good student as well. Perhaps this “assignment” is something you can put to practice in your own Trading Plan, and have Shecantrade review your trading plan.

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Join Sarah Potter of SheCanTrade.com as she has a conversation with Peter Hans, CEO and Co-Founder of Harvest Exchange (www.hvst.com).

Harvest is a platform that builds public and private digital communities across the financial services sector and delivers more content that the Financial Times, as Peter says in the show. Explore what Harvest has to offer as Sarah and Peter discuss the access to better and better financial information to retail investors.

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The market continues to see-saw upward, as Sarah has been predicting, resulting in some good trades in the shecantrade.com trading room. In Episode 24 of the SheCanTrade Podcast, Sarah Potter and Thomas Miller discuss the market, in light of the up and down “new norm” as Sarah describes. With perhaps one of the most descriptive and spot-on reviews of the market thus far in our podcast series, Sarah dissects how to handle choppy waters. We also discuss “V” tops and bottoms, when price makes a sudden stop and reverses the other direction. Sarah has some excellent coaching points on how to incorporate these patterns into your trading plan.

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Join Sarah Potter on Episode 23 of the SheCanTrade Podcast. Developing a trading plan is the most critical component of Sarah’s methodology. All trading decisions should not be randomly determined based on moving conditions, but should parallel a carefully thought-out trading plan in advance, then executed when market conditions fit that plan. Also, it is important to re-evaluate our trading plan regularly to make sure the evidence we are collecting is valuable in our live trading situations. Sarah coaches Thomas through trades in REGN (Regneron) and AXP (American Express) and in the process shares relevant wisdom that you can apply in your own options trading plan and trade executions.

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