Should I end the position of a profitable long call option?

Ted Mosley

Newbie
6 0
Guys, I have consistently find it hard to decide whether or not to take the profit or not when I trade options. How do you guys make up your minds? Is there a good read or general rule to that one can share?

My current situation as follows:
On 9 Nov, I bought a FTCH230120C40000 for $17.
Now it's worth around $28.
Since I believe there will be a 5-10% drop in the market in the next 30 days, I am closing my other positions. But I like this stock particularly and am afraid of being wrong about the market.

Please help.
 

postman

Legendary member
27,546 3,746
Guys, I have consistently find it hard to decide whether or not to take the profit or not when I trade options. How do you guys make up your minds? Is there a good read or general rule to that one can share?

My current situation as follows:
On 9 Nov, I bought a FTCH230120C40000 for $17.
Now it's worth around $28.
Since I believe there will be a 5-10% drop in the market in the next 30 days, I am closing my other positions. But I like this stock particularly and am afraid of being wrong about the market.

Please help.
A 'trade' consists of
A reason for entering (technical or fundamental), and a place to exit.
If you didnt have those set up in advance you're not trading you're gambling.

Ask yourself what was the reason for entering the position, and is that reason still valid. If it was "Stonks only go up" hold till expiry. Otherwise ...



Next time have the answer BEFORE you enter the trade.
 
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tomorton

Legendary member
8,249 1,271
Exiting a profitable position is the hardest decision in trading. I'd always prefer to get out early and watch for the expected price weakness to allow a chance to get back in.
 
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Ted Mosley

Newbie
6 0
Thanks Postman. I entered this trade based on a news of this company will start out news business with other e-commerce big names. I have no clues about the size of potential growth but I am sure this company will grow over the coming years.

Therefore, I tried to buy 1 lot of the stock. Yet, I lacked cash. So, I bought the said option instead.
 

Ted Mosley

Newbie
6 0
Exiting a profitable position is the hardest decision in trading. I'd always prefer to get out early and watch for the expected price weakness to allow a chance to get back in.
Yes. And I tried to do that too. But got cold feet every time for fear of not able to find a chance to buy back at a better price. Hence the postponement till now.
 

postman

Legendary member
27,546 3,746
Thanks Postman. I entered this trade based on a news of this company will start out news business with other e-commerce big names. I have no clues about the size of potential growth but I am sure this company will grow over the coming years.

Time is not your friend with options. If you're going to hold, then convert it to shares as soon as practical.
 

tomorton

Legendary member
8,249 1,271
Yes. And I tried to do that too. But got cold feet every time for fear of not able to find a chance to buy back at a better price. Hence the postponement till now.
Think of the trade in terms of risk. If you're out, there's zero risk. If you exit a winning position this morning, its statistically impossible this will share be the only opportunity today. And then there's always tomorrow.
 

Ted Mosley

Newbie
6 0
Think of the trade in terms of risk. If you're out, there's zero risk. If you exit a winning position this morning, its statistically impossible this will share be the only opportunity today. And then there's always tomorrow.
Very true indeed. Thx!
 

Ted Mosley

Newbie
6 0
Time is not your friend with options. If you're going to hold, then convert it to shares as soon as practical.
Thank you Postman. Your precious advice will be put into action. You make my day. Thank you!
 
 
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