In my strategy, I sellputsthencalls - I sell to open cash secured puts (occasionally naked puts) & then covered calls. Recently, I uncharacteristically did buy a call to open. And it did force me to consider your above question after you bought a put that quickly made you 80%. I bought a call versus XLE, the energy ETF. In my sellputsthencalls strategy versus XLE, I made 2 critical errors in which I lost money. So I bought a long term XLE call to catch up, & importantly, to protect my sellputsthencalls strategy against strong XLE appreciation. I was bullish on oil & the energy stocks. The XLE call became profitable, but not enough to cover my earlier loss. But time until expiration was running out. So I sold the XLE call well before expiration to capture the available profit, even though I was bullish on XLE. (You're never wrong to take a profit.) Continuing with my bullishness, I then bought another XLE call with an expiration date that was 1 year longer. About 10 months before that call's expiration, all of my loss from the 2 critical errors was covered, plus I was able to grab a few more dollars beyond my loss. So I sold my call & put it behind me.
My 2018 primer, Selling Options...Simply Called and Simply Put, targets 3 groups: investors that are new to option trading, Series 7 exam students, and stockbrokers who passed Series 7 but lack good understanding of option trading (for 8 years, I was one of them). But this blog is helpful to investors and stockbrokers with all levels of option trading experience. My posts offer a pithy, first person style that I have used since 1995 to lessen their option trading angst.
Showing posts with label long calls. Show all posts
Showing posts with label long calls. Show all posts
Wednesday, May 17, 2023
I bought a put, it's up 80%, expires in 4 months...sell it or hold longer?
An option newcomer asked the question in the above title. My answer:
Labels:
covered calls,
in the money,
long calls,
long puts,
put selling
Location:
Lewes, DE 19958, USA
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