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Managing Winners and Avoiding Expiration

tasty BITES

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Today’s tastybite discusses why we manage winners instead of just holding our trades to expiration. When we manage winners, we close the trade at 50% of our potential maximum profit.

This allows us to collect profits more often. If we hold to expiration, we face the risk of decreasing theta in short OTM options, decreasing P/L per day, and increasing gamma.

Therefore, we like to manage our winners in order to collect profits more often and minimize risk.

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