Give this video a LIKE to support my channel! Also check out my entire playlist on Trading Options here! kzitem.info/door/PLscTZuOqKWIxSZzy4ObKWDznEsCot_1HU
@brubakertx
3 жыл бұрын
I watched about 5 different Poor Man's Covered Calls videos. You're was by far, the best one! Too bad I didn't watch your video first....lol. I added you my Subscribed list! Thanks!
@JakeBroe
3 жыл бұрын
Awesome! Welcome to the channel Bruce! Great to have you with the channel!
@aarniella
Жыл бұрын
Totally agree! Excellently explained video.
@cavaradossi7761
Жыл бұрын
Best explanation that I've heard and I've been through a bunch. Clear, concise, no extraneous chatter or confusing information or tangents. Well done!
@alexmartins8182
5 ай бұрын
You're right that Amazon shares skyrocketed, and in that case, it would have been better to own the shares than to buy "leaps." However, that's not always going to happen (almost never), so I prefer to make many hits rather than aiming for a home run. Thank you for your video.
@nsharma99
5 ай бұрын
Dude when Amazon dropped to $90/share back in Dec 2022 I just sat on my hands… so much regret. I had plenty of capital to invest too.
@tempqwerty923
5 ай бұрын
I love this guy. He explains everything ground up with so much clarity, never over the top and doesn’t sound fake, love the little enthusiasm in the beginning of his videos - so natural . ❤
@lisadawley
2 жыл бұрын
You helped me make my first covered call and I earned $168 with no risk...studying this video today to make my first poor man's covered call. Great job explaining detailed steps!
@lisadawley
2 жыл бұрын
When buying the LEAP, is it buy leap (buy to close) and sell the call (sell to open)?
@JakeBroe
2 жыл бұрын
That's awesome Lisa! When you buy the LEAP, you are buying to open. Once it is in your account, you can then sell to open a call against it.
@joh2744
2 жыл бұрын
You are the only youtuber I'm learning something from. Keep your good works!
@jasonnowicki5066
3 жыл бұрын
best ive heard so far. very detailed at endgame situations
@JakeBroe
3 жыл бұрын
Thanks jason! Cheers!
@andreunz
3 жыл бұрын
Dear Jake great video as always. Given this has happened to me on selling short covered calls, when the price of the stock goes down, the truth is that: the option will follow down and, you can make very little money ( if at all), if you still want to sell calls outside of the money. In that case in fact none will buy them... So in order to make money (again) again on the short call sales, you do have to hopw, that the 120US$ gos up to at least the 130US$...
@extrabarba
6 ай бұрын
If you use a high delta in your leap that much time out and the stock price goes up as expected, that leap can become illiquid, you have to be carefull.
@ShivamSPatel-is-on-fire
Ай бұрын
what does that mean??? that you can't sell to close the leap?
@sk_77
6 ай бұрын
Jake - Can't thank you enough man... the best video and explanation on PMCC. Appreciate it!
@ACR4008
2 жыл бұрын
16:19 What I have done before the short call reaches expiration (and assignment) is just close both legs of the position. You sell the LEAPS but with it you sell any remaining extrinsic value (which you would lose with exercising).
@OlegScherbina
2 жыл бұрын
Thanks Jake, I learn from your every video - your options game explanations are the best on KZitem.
@JakeBroe
2 жыл бұрын
Thanks so much Oleg! I greatly appreciate the support!
@kamaujla8341
9 ай бұрын
Thanks so much Jake, you have no idea who many videos I've watched on PMCC to understand what would happen (scenarios) if the Long/Short are exercised, no one has explained this b4. I watched this video a couple of time to let it sink in, but finally understand my various scenarios as to what would happen or what i could do.
@xianxiong3440
Жыл бұрын
The only risk for this strategy is that the market goes in the opposite direction of your long option all the way until expiration, or you are being greedy and sell options that will lose money in total if those short options get assigned at expiration date.
@brianchill7443
2 жыл бұрын
Thank you Jake! This was an excellent instructive video and most helpful to me! I’m going to look through your playlist for an example of a LEAPS that goes through a stock split. If you don’t have one, it would be great to see your explanation. Also, I remember you stating you were getting close to exiting the military. I am retired Army. I wish I would have had this knowledge while I was still in the military. Thank you again!
@billassim9014
2 жыл бұрын
I watched other video s on this, Jake by comparing to a regular covered call, I understand, thanks
@JakeBroe
2 жыл бұрын
Thanks for watching Bill! Cheers!
@aurinator
3 ай бұрын
Apparently these are also known as "Synthetic Covered Calls" in more of an academic setting, and it makes sense but I too learned it as a PMCC.
@DividendBuster
7 ай бұрын
Hey Jake. Loved this video explanation from 2 years ago. I have followed your channel for about a year now (on the options videos). THANK YOU for your service!!!! One question I did have was... towards the end of the long call exp. date, assuming I have sold short calls for premium, how do I calculate how much I can sell the long call back for? Just trying to find out potential total premiums/$ earned for a PMCC. All videos i see on youtube explain buying the long call, selling short calls for premium, maintaining both contracts...but I dont see any videos giving theoretical examples of the potential that can be made in total...so closing the long call portion is still a mystery...any helpful words you can offer would be greatly appreciated.
@volatilenomad9854
6 ай бұрын
This is very educational and thank you for sharing. In terms of risks involved, and without veering away from the deltas you recommended, would you consider PMCC less risky than flat out Wheeling?
@balancingball
3 жыл бұрын
Thank you Jake. This is a very nice video. Can you share how you choose stocks to do leaps on? Fundamentals? Or other factors? Thanks
@JakeBroe
3 жыл бұрын
That's a good video topic! I'll for sure be talking about LEAPs again in the future!
@matthewsherwin8741
3 жыл бұрын
Wow! You did a really nice job with this, Jake! I’m impressed. Reading just a bit between the lines, though, I think you look down your nose a bit at buying shares of stock and you do this quite intentionally. I know you do buy shares of stock in your other accounts so I think you might be gearing these videos to get a lot of views for your KZitem channel. Don’t get me wrong; you’re brilliant but yet I think you cover topics that are carefully chosen to get votes and subscribers.
@JakeBroe
3 жыл бұрын
Hey Matthew! My whole life I've been a pretty serious math nerd and options to me are just the most interesting thing in the world at the moment. Eventually I'll calm down and just buy ordinary stocks, but right now the returns I believe I can get from leveraging money with options is incredible. I know I assume the risk, but at this point in my life I am fine with that.
@bunkerman99
3 жыл бұрын
@@JakeBroe I think you assume far less risk than actually owning the stock.
@JustinTrader85
2 жыл бұрын
What a great, intelligent presentation. Many thanks
@victormtz16
3 жыл бұрын
I was wondering what the benefit of leaps deep in the money was. Thank you!
@ciblll1
3 жыл бұрын
That was perfect explanation thank you
@JakeBroe
3 жыл бұрын
This was a perfect comment! Cheers Bora!
@lucauau
Жыл бұрын
How am I supposed to manage the long ITM call? When am I supposed to close the position? If the underlying stock price goes up? If it goes down? Would be nice to analyse the different scenarios 😊
@buddhavaro
6 ай бұрын
Great video! Do you buy the long term call option and sell a short-term call for premium in one trade? And then after that, you keep selling the short term calls?
@xiaobiaoxu5984
3 жыл бұрын
Really liked your videos/explanation on options. I have a specific question though. In this vertical spread example, do you need to buy the long-term call and sell the short term call together in one trade? or, can you actually sell the short-term "covered" call after you already bought the (longer-term) call?
@unexpectedgoodluck2210
2 жыл бұрын
This is my question too! I have purchased my LEAPS but cannot figure out how to sell a covered call on them. Can you do a Fidelity tutorial?
@xiaobiaoxu5984
2 жыл бұрын
@@unexpectedgoodluck2210 It doesn't matter actually (buy two options together or not). There will be always two separate options ... you buy a leap, then sell a short for the same stock/etf, that is it ....
@dannysun6186
2 жыл бұрын
I was thinking using loans to own underlying shares to sell covered call against it paying back with amortization instead of doing PMCC by taking the risk of OTM from LEAP.
@DrShaka
6 ай бұрын
Great video. Thanks for the explanations!!
@khayyamsikander2932
2 жыл бұрын
Excellent explanation 👍👍👍
@JakeBroe
2 жыл бұрын
Thanks Khayyam! Cheers!
@indonesiaforlife
2 жыл бұрын
19:39 if you decided to close out the long call then you get to keep to $300 increased in value correct?
@jacobc522
3 жыл бұрын
Does it make sense to close your short call and leap instead of letting the short call expire ITM, giving up that extrinsic value?
@waltereast-z8n
3 ай бұрын
just came across this my question is strategy on the stock price decreasing...once you collect your 50% profits off your short call when you reestablish that short call are you still setting at 30 delta based off the current stock price?
@Kusa2024
Жыл бұрын
Hey Jake in Schwab brokerage what level do I need in order to do poor man cover calls?
@jamiehackney4420
2 ай бұрын
Do I have to have level 3 to do PMCC on Robinhood? I can't get approved. Can you do a Long Call on one order then do a short sell call on another? or does it have to be on same ticket?
@TavinhoGodoy
Жыл бұрын
Hey man! How to do a PMCC on webull? Thank you
@ampiciline
Жыл бұрын
Jake , this was THE BEST explanation I have ever seen after watching 20 videos ....I just opened a Fidelity account and applied for option and i got approved for tier 1 .....so , i don't know if i am approved to do vertical option ..... can I trade two different tickets ( order ) 1) buy option call at strike price matched to delta .8 and expiration date > 12 month and 2) open to sell call at strike price match with delta 0.3 with expiration date< 30 days ........ OR , i have to use something else to execute this two orders and getting LINKED together in my fidelity brokage .....I am so confused how to put these two orders . can you help please ?
@afzalrafid
26 күн бұрын
Thx
@AJF66OG
2 жыл бұрын
Good video! Do you know how Schwab treats the ITM short put? Do they automatically exercise the LEAPS option, or do they just assign you short stock?
@casienwhey
2 жыл бұрын
Here is the problem with the poor man's covered call. When (not if) your call is assigned, you will either have to roll the call and take the loss hoping to recover it on your next short call you sell, or let your long call get called away and lose the time value in the contract, which is not a good choice. If the stock moves up a lot, then you'll be doing a lot of rolling to avoid losing your long call. With a regular covered call, you don't have this issue because the stock does not have time value you need to worry about. So, if I'm gonna write cc's I'm doing it with stock.
@alainleistikow4800
3 жыл бұрын
Totally noob question, but at 10:01 in your video you mention "Sell-to-Open and then Buy-to-Close; Try to capture 50% of value". How do you determine that?
@hvacguy11
2 жыл бұрын
Having such a hard time understanding assignment so will my broker automatically sell me long leap if I get assigned and basically it’s a wash?
@rvmorgan47
2 жыл бұрын
how does this work long term. If you paid 6000 for the leap and sold 167 contracts on it for 24 months the length of the leap you would have 4000 so over the two years you would lose 2000 doing this as I see it. What am I seeing wrong?
@argentinarodriguez4170
2 жыл бұрын
Do you have to start buying a Leap to turn it into PMCC or can you use a CSP or a Covered Call as a PMCC?
@tonygatto48
2 жыл бұрын
Cause i have not done this i have a question..... if a stock is trading @ $22 --- and you bought a leap @24 then sold a call @24 -- then the stock rises up to lets say $25 ... would this not be a better trade then an itm leap ? I mean if its going up the vol should be the same to lower, so buying back the sht call should not get expensive... if it gets assigned you will still get the premium from the leap as its went up in price as well.... what am i missing?
@lucauau
Жыл бұрын
Is intrinsic value changing during time? If I buy a 0,9 delta ITM call option.. what happens to its intrinsic value let’s say after 6 months? I presume it’s linked to the change in delta (so in the stock price). Is the ratio between inV and ExV stable? I’m basically trying to understand if it makes sense to take as granted (for all the trade length) the initial assumption
@cleaner1984
2 жыл бұрын
Hi Jake, @13:45 you say we can "roll up and out" but what does it mean exactly? Does it mean we buy back the short call (buy to close) and sell another call at a higher strike price? But if we are assigned, isn't it too late to buy back the short call?
@backyardevolutionwithhoxyt9657
2 жыл бұрын
Does it make sense to also buy relatively cheap OTM puts (at an earlier expiration) to insure against the stock price falling too severely and taking too much value from your leap? At very low strike prices it seems like you could buy very cheap puts to at least limit your losses or will that usually end up eating a lot of your returns?
@drip6337
2 жыл бұрын
I bought a leaps, and now i want to start selling calls on it but fidelity wont let me sell to open even though i have the leaps as collateral. I do have access to do vertical spreads on fidelity, do i have to open the leaps and sell the call in the same order?
@tristanolarti9671
2 жыл бұрын
What if you can’t afford to buy 100 shares of the assigned PMCC? Wouldn’t this be worst case scenario?
@sureshnagaral5388
8 ай бұрын
Good
@billionj
2 жыл бұрын
Ten to the Ninth!
@JakeBroe
2 жыл бұрын
Cheers billionj!
@TEKKENEnterMyDragon
2 жыл бұрын
Hi, can webull perform this?
@JakeBroe
2 жыл бұрын
Sure! Webull has options trading!
@TEKKENEnterMyDragon
2 жыл бұрын
@@JakeBroe but it cannot perform PMCC though
@muffemod
3 жыл бұрын
First!
@JakeBroe
3 жыл бұрын
You got it muffemod! Cheers!
@LeeKelley
6 ай бұрын
Why would you EVER exercise your LEAP? That’s the only big miss with this explanation.
@SuicidelG
2 жыл бұрын
I see you have the gentrifiers flag flying high...long live the old milwaukee flag!
@JakeBroe
2 жыл бұрын
Haha, have you ever seen the TED talk talking about the old Milwaukee Flag? It's terrible! kzitem.info/news/bejne/0aSsm52Be2SZn2k
@kanegs1
2 жыл бұрын
Probably the best explanation of PMCC's I've heard, well done Jake! You explain things the way everyone is wanting to hear, straight to the point with great examples, love it! Thanks Jake!
@JakeBroe
2 жыл бұрын
Thanks kanegs! I appreciate that!
@victormtz16
3 жыл бұрын
I was wondering what the benefit of leaps deep in the money was. Thank you!
@deadleague3618
3 жыл бұрын
Daily education completed, thanks Jake
@JakeBroe
3 жыл бұрын
Thanks deadleague! Cheers!
@MorselOfBread
Жыл бұрын
22:50 6) If stock price goes way down below your break even and you keep selling cc, you can be assigned for a loss. If the stock goes way way down below the leap strike, you're fucked.
@justinlucas1127
3 жыл бұрын
You are awesome, Jake. Appreciate you taking the time to share your knowledge and helping people understand trading techniques. Great explanation!
@JakeBroe
3 жыл бұрын
Thanks Justin! I'm just happy if people find it and it helps people understand. Cheers!
@TheEarth350
2 жыл бұрын
Hello Jake, quick questions please, in worst case scenario if both legs are exercised, do we stiil need to have cash availabe in our account to be able to buy actual 100 shares to sell them to the buyer at strike price? Please reply. Thank you
@kiarathebabyrottweiler4279
3 жыл бұрын
What a great detailed explanation of the PMCC mechanics!! I like the way you run through the 3 possible outcome scenarios (with the numbers) and then the risks to keep in mind. Very helpful! Thank you Jake!
@joshd.6820
2 жыл бұрын
The only thing that was not out-right explained, is in the 3rd scenario, you obviously cannot continue to sell puts because the price has fallen below the LEAPS. if you sell a put and it gets assigned, you could lose big on the LEAPS. You have to wait for the price to come back up. This could defeat the purpose of PMCC's but that's the risk...or at least how I understand it.
@that.alaskan.realtor
2 жыл бұрын
@@joshd.6820 you sell covered calls continuously. You have to wait for the price to come back if you held 100 shares anyways. This strategy is used on companys you WANT to own regardless of short term fluctuations
@MorganBrown
3 жыл бұрын
My biggest issue with the PMCC (which I trade religiously) is the lack of liquidity of the LEAP. Even on SPY, a typical LEAP may have very low daily volume. I once rolled a LEAP on TLT and had to sell it for less than its intrinsic value! Sounds like a sweet trade to take the other side of, if you are well capitalized
@edod2997
3 жыл бұрын
Nice explanation. This is the first one of your videos I've seen and I'll be checking out more. (I recognize that flag--we may be neighbors).
@JakeBroe
3 жыл бұрын
Thanks edod! Welcome to the channel! Great to have you with us!
@iphonedaily
5 күн бұрын
Honestly, you made the best option explanation videos I ever saw. 👍🏼
@bhupeshtuteja
Ай бұрын
It’s nice explanation. However, one more scenario is bugging me where you can loose money in this strategy. what if AAPL stock first falls to $120 as in your last scenario and nothing gets exercised. Then you sell another covered call at $124 and the APPL stock shoots up to $125. Here everything will get exercised. Won’t you loose money on the leap?
@nitinhebbar
3 ай бұрын
I don't know why Jake stopped making video of this genre. I used to watch all of his trading videos. He had since switched to covering Ukraine-Russia war.
@Jazzycat50
2 ай бұрын
Covering the UA/RS war was a lot more profitable for his YT channel.
@ilangosivaraman1515
3 ай бұрын
Thanks - well explained - I would request you to make a video ' PMCC for SPY' . Thanks
@da5731.
8 ай бұрын
To perform it, you need level 2 option? Have to do a spread, buy 2 call options at once (leap and otm)? You can roll out one part of the legs (spread)? You could limit debt the otm leg to 50%, to automize the roll out?
@behrensf84
3 жыл бұрын
So, in a covered call, can you keep rolling until it is out of the money? with every roll the premiums go up and the value of the stock goes up.
@JakeBroe
3 жыл бұрын
Yes, you can roll a covered call that looks like it will get assigned to avoid getting assigned. Do you mean just buy to close and then sell to open a new one for more premium faster?
@behrensf84
3 жыл бұрын
@@JakeBroe yes
@frankferreyra6807
9 ай бұрын
Should you buy back covered call you sold, when you think stock will move higher
@kaziahmed7897
Жыл бұрын
Hey Jake, I used to follow you on your stock trading you tube video. I see you occasionally on your Ukraine videos. Just curious if you plan to get back to trading again?
@-mr3puttz-310
3 жыл бұрын
Seems to me that for this to work the stock must go up. You cant sell enough calls to make up for the price paid up front. So if it didnt go up you dont have shares and youre down the difference between paid and taken in. I guess you could roll it out another year + and hope the stock goes up but that would be more out of pocket and you might end up in the boat.
@JakeBroe
3 жыл бұрын
Yes, your LEAP should be on a good company that is slowly going up over time. If the share price of your LEAP plummets, then selling calls against it might not help you much.
@wolfgangi
3 жыл бұрын
Hey Jake as I was rewatching the video @17:55 you mentioned the worst case scenario, but shouldn't the worst case scenario be that the price of the underlying asset has dropped below the strike of your leap? In that case we lose everything ?
@JakeBroe
3 жыл бұрын
Yeah, that would be a disaster for sure, haha. But that is the worst case scenario of a LEAP, not really a PMCC.
@wolfgangi
3 жыл бұрын
@@JakeBroe Ah I got you thanks for clarifying!
@desongliu6463
2 ай бұрын
this is super clear!
@bunkerman99
3 жыл бұрын
One thing worth mentioning Jake. Not saying this is the best way to do it and just for illustritive purposes. You Buy the .90 Delta call and today that is June, 23 expiry. Lets say you sell .25 delta 6x until June, '22 and they are all closed for a profit and AAPL behaves itself. As the call buyer you then have the opportunity to sell the 2023 Call in 2022 and buy the June, 2024 call for very little money to add that additional year if you so choose ($300-$400 maybe or less). By then you basis is quite abit lower and that extra year has more potential benefit than the new risk it adds. Just a thought.
@hassanem8731
3 жыл бұрын
Thank you so much this makes so much sense now
@JakeBroe
3 жыл бұрын
Glad I could give a clear explanation! Cheers Hassane!
@deepak.finance
3 жыл бұрын
This was pretty easy to understand strategy… What stocks are good for doing PMCC?
@wilbertmatherson3897
6 ай бұрын
I really appreciate the way you explain the PMCC, you are a great tutor. Thanks
@sundri21
3 жыл бұрын
What if you have margin 4 X leverage by a certain broker? In this case, is it still good to do the PMCC?
@justinsane7128
2 жыл бұрын
Which broker has 4x?
@zsynhgd
2 жыл бұрын
very nice! Great video. It is very helpful!
@newbielives
3 ай бұрын
Beautifully explained
@shady80s22
3 жыл бұрын
Man I have watched many of these type of videos but this one is the one that really drove it home for me because of the extensive detail to everything. Ty sir subscribed
@JakeBroe
3 жыл бұрын
Awesome! Welcome to the channel Shady 80's! Great to have you with us!
@michaelramos3701
3 жыл бұрын
Loving the videos, I learned so much watching your option videos!! Keep them coming...
@behrensf84
3 жыл бұрын
so with this kind of covered call you have to keep rolling until the it expires out of the money. otherwise you need to go by the shares, because technically you don't own any shares. you are selling a half naked option...
@JakeBroe
3 жыл бұрын
Hey Felipe! Ideally, I would argue you shouldn't be worried about being assigned and having to buy the shares. This shouldn't happen that often with a delta of 0.30. If it does, maybe you are set back a little, but that's a small price for hopefully more gains in the long run.
@behrensf84
3 жыл бұрын
@@JakeBroe The problem for me is if I get assigned when then I will have a lot of capital gains pay. I bought a lot during the 2008 recession, and last year during the Dip in March and April. The capital gains will be way more than any premium I can collect.
@radhsri
2 жыл бұрын
One of the best explanations of PMCC..
@JakeBroe
2 жыл бұрын
Thanks Srini! Cheers!
@mt-fy8qf
5 ай бұрын
Thank you. Good video!
@Nice-Y
3 жыл бұрын
Does this require option level 4 or 3 on Fidelity?
@dubbazify
9 күн бұрын
Subscribed.
@fozzybear9114
3 ай бұрын
TRUMP 2024!!!!
@infate-726hl87
3 жыл бұрын
Hey Jake, so when you buy a LEAP, you dont own the stock yet, so could you re-explain how are you able to sell a covered call. Thanks.
@JakeBroe
3 жыл бұрын
Hey David! That is correct, you don't own the stock. But since you own a call (the LEAP), that has a strike price lower than the call you are selling, your broker knows you can 100% cover the call you sell as long as you hold that leap. It's not a true "covered call", it is a vertical spread. Poor Man's Covered Call is just the nick name for it.
@sergiydanko5676
3 жыл бұрын
Nice Video Jake. Greetings from Germany
@JakeBroe
3 жыл бұрын
Thanks Sergiy! Cheers!
@myturninline8633
2 жыл бұрын
Is this only for calls what about if I want to do it on outs or even buying a call leap then selling a long put ?
@JakeBroe
2 жыл бұрын
Sure, you can do the reverse of this on the put side as well.
@MT-qq1rq
3 жыл бұрын
Good info Jake. I bought a LEAP on CRWD 2 weeks ago and today my short call on CRWD is ITM so I decided to close on both positions which may not have been a good idea since the leap still have a lot of time value left. But profit is profit and I'll get back in CRWD when it pullback again.
@JakeBroe
3 жыл бұрын
Nobody ever made a mistake by taking profit! No worries Mike!
@LiquidSion212
2 жыл бұрын
Amazing video thanks for sharing
@JakeBroe
2 жыл бұрын
Thanks for watching and leaving a comment! Cheers Sion!
@craigchambers4183
3 жыл бұрын
I am not understanding how - if exercised - I am making money. Does this mean that if the long leg (the $6k) you BTO is exercised you must be paid the full amount of the stock at whatever price you have to pay to buy 100 shares that the short leg made you buy to cover the assignment? Using something from today: Let's say I buy a long deep in the money at an expiration of March 2022 call in NIO today (value of $38.86 per share) for $25 strike at a cost of $1,760 and I STO the call this week (Aug 2021) for $28 at the strike price of $40, and it gets to $40. I collect $28, but I have to come up with $4,000 for the stock. How can I sell the long call for $4,000 to cover that cost? If my broker shorts me $4000 to pay for the stock, I just have a LEAPS left for the future that only has +/- $1700 intrinsic value, plus the $28. What am I missing?
@deviambati3805
2 жыл бұрын
Thank you Jake for a detailed explanation of poor man covered call. I will try and see how it goes. Greatly appreciated for your time and effort to bring to beginners.
@JakeBroe
2 жыл бұрын
Thanks for watching Devi! Best of luck to you!
@cryptoenthusiast4999
3 жыл бұрын
Excellent video. The best explanation of PMCC to date.
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