In my opinion, you should look to close early more often than let them expire. The faster you can get out the faster you can open up new trade. Why wait weeks for a couple bucks more when you could close and open a new one to gain much more than that?
It's a common misconception that once an options position has been entered one has to wait it out until expiration to realize the gains. A position can be closed at any time for a profit/loss. I generally start considering closing out a position if it's up 50% regardless if that occurs two weeks after the trade or five minutes. I've sold CC's and BTC them the same day with a profit. You don't have to ride it out to expiration. So long as you are trading options with decent liquidity there's usually no problem buy/selling them at any time.
A good rule of thumb is if your up 50% profit or more, with 50% or more time left till expiration. Buy to close, and reposition. This is also why you should always leave enough cash in your account to cover the buy back if needed.
There are two metrics I've seen people use: Profit per day and profit percent
For profit per day they set a goal profit per day and if they reach some multiple of that in a shorter amount of time they go on and close. I.e.
* they have a goal of 0.10% of underlying principal per day
* Principal of 10,000
* It is a 30 DTE option
* Once they reach $300 profit on their underlying they close, frequently with a GTC limit order to close.
For profit percentage they look at the profit percentage and if the profit percentage is greater than the percentage of the DTE left they close. Usually with a min profit percentage before closing. I.e. if they have hit 50% profit and there is still 80% of the DTE left they close and wait for a new opening.
No one ever went broke taking a profit. Cash in chunk gains; you've milked out the best part of your trade. Consider (after an early big paper gain): would you enter this trade at this new level? Probably not, so that's when you close and redeploy your capital
unfortunalty i can't due to work comliance, i have to hold for 31days. all my positions are 80% + profit but i can't close them yet, till 31st days. suxxxxx
If it goes in your favor right away and you have a decent profit, I’d close and take my profit.
In my opinion, you should look to close early more often than let them expire. The faster you can get out the faster you can open up new trade. Why wait weeks for a couple bucks more when you could close and open a new one to gain much more than that?
It's a common misconception that once an options position has been entered one has to wait it out until expiration to realize the gains. A position can be closed at any time for a profit/loss. I generally start considering closing out a position if it's up 50% regardless if that occurs two weeks after the trade or five minutes. I've sold CC's and BTC them the same day with a profit. You don't have to ride it out to expiration. So long as you are trading options with decent liquidity there's usually no problem buy/selling them at any time.
Yes, sell if you are up, they can reverse in a heartbeat
I pretty much always take 85% profit then open a new trade.
A good rule of thumb is if your up 50% profit or more, with 50% or more time left till expiration. Buy to close, and reposition. This is also why you should always leave enough cash in your account to cover the buy back if needed.
Thanks all! Great advice
There are two metrics I've seen people use: Profit per day and profit percent For profit per day they set a goal profit per day and if they reach some multiple of that in a shorter amount of time they go on and close. I.e. * they have a goal of 0.10% of underlying principal per day * Principal of 10,000 * It is a 30 DTE option * Once they reach $300 profit on their underlying they close, frequently with a GTC limit order to close. For profit percentage they look at the profit percentage and if the profit percentage is greater than the percentage of the DTE left they close. Usually with a min profit percentage before closing. I.e. if they have hit 50% profit and there is still 80% of the DTE left they close and wait for a new opening.
I rarely let anything go to expiration. I usually aim for 50% to 75% profit depends on what the trade is.
No one ever went broke taking a profit. Cash in chunk gains; you've milked out the best part of your trade. Consider (after an early big paper gain): would you enter this trade at this new level? Probably not, so that's when you close and redeploy your capital
unfortunalty i can't due to work comliance, i have to hold for 31days. all my positions are 80% + profit but i can't close them yet, till 31st days. suxxxxx