Paul, First, way to go, dude. O.K., all I can give you is the criteria I use for taking profits. Basically, when I am swinging for the fences, which is most of the time, my minimum target is a quadruple. I tend not to sell until I get a quadruple unless the fundamentals change, which is very rare, or expiration day approaches, which is much more common.
However, my targets are usually for much more than a quadruple. So, I often take the profits during a good period and roll the original amount of money (pocketing the profits) down in strike price and out in time. For example, my BMC Jan 70s, which were way out of the money when I bought them, were just rolled down and out to Feb 45s, which is the lowest strike price currently available. I don't really think BMCS has much downside here, but I've had a 1000 percenter and I'm willing to let the original amount ride just in case.
I don't like to fuss with expiration day. Too many weird things happen then, so I tend to roll lesser winners down and out early in expiration week.
The main thing to keep in mind is that this is not pyramiding. My profits are not being plowed back in, just my original investment.
A more conservative, but, in my experience, less rewarding, alternative, is to roll as soon as you have a double, investing the original amount of dollars in a lower priced or further out option. The negative about this is it takes you twice as long to reach a quadruple on the original investment. I prefer to risk 100% of the original for the bigger payoff, but the double and down technique is often less taxing for new options players.
Hope this helps. |
