Posted July 07, 2021
By Alan Knuckman
A Tip For Booking Options Gains
With a new earnings season around the corner, we are in position to maximize profits as the major averages look to attack previous highs.
So, I want to take some time today to answer a question from a newer trader.
I recently had one of my premium readers ask what happened to his position after he sold his Apple calls for a gain. Specifically, he wanted to know if he had any obligations to buy shares after getting rid of the calls.
Fair question! If you're new to buying call options, it can be confusing as to whether or not you may have to purchase shares.
But if you're trading for short-term gains, you're probably not in the business of holding shares of stock only options!
Once you've sold ALL of your contracts like my reader did with AAPL, you no longer have any obligations towards your position.
That means you don't have to worry about the expiration date, buying shares of underlying stock, or the options price after you sold it.
The position will leave your portfolio. And just like that, you're out of the trade!
You can put your winnings towards the next recommendation or something else you've been saving up for.
Keep it In the Money,
Trading Tip of The Day: Stay Vigilant!
The averages are hanging out around their all-time highs to start the week. But that’s mostly due to the moves of a handful of large stocks. Many other names have been marking time or slowly fading... It’s difficult to find much sustained momentum and follow-through right now.
In environments like this patience is the name of the game…
To add to this, market news is pretty thin right now too. So folks are using their time to freak out over little events, like that new China ride hailing IPO DIDI. It was down big yesterday, which was just its third day on the NYSE, over some news about China shutting down the app to conduct a “cybersecurity review” of the company.
Hmmm... in other words, they want to make sure they’re getting all their data sent directly to the government. You know how it works...
Of course, an easy way to avoid this type of drama is to not buy these new Chinese stocks. Fresh IPOs plus a Chinese crackdown is the path to fast losses…
Either way, it’s important to stay vigilant in the market as we ride out the Summer.