Short-Term Loss

You bought the stock at $37.50, sure it was going to $100 soon. But alas, they didn't ship the new whizzbangboff product in time; a competitor came in and took the market and now, just 5 months after you bought it, the stock is trading at $22. And you fear it's heading to $10 before it recovers, if ever. So rather than wait, you swallow hard and sell at $22, taking a short term loss in the transaction. But all is not lost; not all of this is bad news. The short term loss offsets the short term gains you made selling out of the money calls that expired worthless to the buyer, so you kept all the premium you sold to them. The "short term" here matters because short term anything in investing, is taxed at ordinary (high) income tax rates versus long term anything which is usually taxed at lower tax rates. So there's solace when you lose in a taxable account. Keep throwin' fast balls. Bull Durham. Fine film.