Taking Profits

Discussion in 'Options' started by Arnie Guitar, Nov 5, 2012.

  1. I normally just write credit spreads on the S&P500, but I keep a casual eye on a few stocks, Ford being one of them.

    On a lark, I bought some Jan 18 2014 10 calls. Only 5, but they've more than doubled, so I'm up about $500, hardly enough to change my life.

    With more than a year to go till expiry, what should my mentality be? Don't be greedy, take the money? I've got over a year to go, let it ride?

    I know, I know, if I have to ask, I shouldn't be trading...I guess I'm just making conversation.

    Thank you.
  2. If you closed the trade, what % of the max potential profits could you currently keep?
    That being, how high do you feel comfortable letting it go, before you think it is over valued?
    Is it 10% there?
  3. I don't know.
    That's the problem I guess.

    Maybe the real question is what do I think Ford's share price will do over the the next year?
  4. The nice thing about selling credit spreads or naked puts, is..... you don't have the stress of wondering when to close a trade, as your profit is already predetermined.
    On the other hand, as far as stress goes, I guess your problem is a nice one to have.
    Perhaps you should keep your stock, until you find another trade of even better upside potential.
    Perhaps that would be a good time to switch your cash from one trade to the other.

    Personally, I don't like being in your position either. Hence the reason I sell puts for a predetermined profit.
    Who needs the agravation of getting out too soon and watching it rise,.... or staying in too late and watching it drop!:confused:
  5. I don't know anything about options, but I know something about taking profits

    when you're sitting on one it seems all metaphysical

    but over time it's just a matter of math

    One of these days, they'll make you an offer, and you will refuse it

    But later on, you will realize you should have taken it

    That's when you should sell

    half the time after you sell, it goes higher than you ever dreamed it could go

    occasionally you got out just in time

    either way, you never feel good

    but this aint metaphysics

    it's all just math
  6. Since you seem to be on the fence about whether to sell or hold, why not do both? Sell 2-4 of the 5 and see what happens with the last portion as expiration approaches.
  7. Hi there Arnie...nice trade! I agree with Tomahawk that taking some profit now might be nice. since your comfortable with spreads why not sell some OTM calls and create a bullish call spread. Your right that time is not your friend and if you hit a homerun earlier than planned....great!