First let me start off by saying many traders have asked me NINJA you have some serious balls or are very patient. Or I need to be patient like you. I tell them im already out with profit I just leave one foot in the door just incase opportunity happens to represent itself again. This gives me the advantage to sell as close as I can to the top without the constant. FML I missed out on on a 10 bagger (1,000%).
Here’s a trading strategy that allowed me to be more profitable in any market conditions. This I developed over time going from trying the 50% rule (which made no sense until I saw I was barely locking in profit). Hopefully this helps Traders learn to take profits without having to question should they sell. Also can be applied to stock traders. Below I break it down for you .
The Break Down:
This is just an example. Amount shown is used for educational purposes. Apply it as you see fit.
$155 cash( amount using as example)…
- Buy 3 contracts @.45 + commission =$151.41
(If stock goes up 100% )
Reduce 75% of position( or more than half of position in this car 2/3)
- Sell 2 contracts @1.00(100%) =$195
(Now you’ve made back $151.41+profit locked in which now you are FREE riding with 1 contract )
“If” remaining 25% or 1 contract goes higher let’s say stock price jumps or runs higher now your premium is up another 1-200% of top of that. This is your opportunity to maximize profit.
Now option price goes to lets say 2.20×3.97
- “If” sell last 25% or 1 contract @2.97+ commission =$290
(75%)$195+(25%)$290-(initial investment)$151.41=Realized Profit(328.59)
*REMEMBER* Its not always about playing with big sizes. Keep your positions small and you will always be profitable.