Hi Freeus: How long do I keep options? Good question. Not an easy answer. I'll explain.
The call options I buy usually, but not always, are about 6 months out. I sort of think of it as taking a position, not necessarily a certain option, per se. I will keep that "position" sometimes right down to the week of expiration. It depends on the underlying and how it is reacting at the time and my basis. I normally get totally out of a position at least 4-6 weeks before expiration.
When I take a position, let's say 100 contracts, I may churn 30-40 of them in any week. Of course that depends on the profit, the underlying, if it's running, all kinds of variables. Point is, I don't have a set rule. I keep some for the longer term, and I sometimes churn, as I call it, a small portion of the entire position.
I oftentimes will take profit when it runs up 30-40% or so. Maybe take some off the table but not close the entire position. I did that this week with EXTR. I closed about half of my Mar 70's, took the profit, and got right back in with a portion of that money the next day, this time with Mar 80's.
Leaps, I usually don't buy. I have QCOM leaps that I've held for awhile now and they have a low basis. I'll hold them. No rush.
I do believe it is good to practice discipline with options and don't be hesitant to take profits at 30-35%. Do it over and over and over until stinking rich.
RR |
