I sympathize with your quandary over when to sell profitable shorts. I have the same problem with puts. For example, a few weeks ago I sold a put on IBM for $800 (for a 300% profit) that is now worth $1,700. It always feels awful to leave so much on the table. But I have also watched huge profits dwindle to nothing because I wouldn't sell. I think the best solution for me has been to make a partial sale when I reach a point I can't resist (for me, it's a triple with puts) and then I can feel like I'm playing with the house's money. In reality, I'll bet the best solution is to have a methodology that defines a target sale price in advance, and then stick to it.
Wishing us luck,
/Kit
By the way, I am curious about what names you short. I buy puts on mostly technology stocks, currently BRCD, ADP, IBM, MU, AMAT, and the semiconductor holders (SMH), and on shaky financials and accounting problems, such as JPM, COF, TYC, and KMP. |
