Options trading is a smart way to take advantage of the stock market’s price action, as it offers a cheaper way to go long or short on companies while limiting downside risk.
But if you invest in options without a game plan, you could end up losing a significant amount of money before youeven have time to blink.
I often get asked what separates successful and unsuccessful options traders. And far too often, it comes down to knowing how to manage profits.
People tend to spend a lot of time determining when they should get into their positions. But figuring out when to exit those trades is just as important — regardless of whether or not they’re going in our favor.
This seems obvious when a trade suddenly moves against us, but it becomes more difficult to remember when we’re sitting on a huge gain.
This psychological dilemma is often called FOMO, or the “fear of missing out.”
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