And the Market keeps rolling! Protect yourself!
Everyday we check the charts and there it is. Another Green Day. So what do we do considering it's getting to the point of over-extension and could turn around any day now. That's where Options Trading comes in for everyone. Hedging and Protection is key right now. Strategies like Covered Calls and Protective Puts are paramount to protecting your overall portfolio.
For example, if your position is very profitable right now, buying a Put instead of setting a stop loss would be a great way to hold on to your position through a pullback without having to liquidate. A Protective Put at the strike price of an acceptable stop loss would allow you to remain in the stock until you decide to pull out in case the stock comes back. Consider the costs of this first, but if it's not too expensive this is a great way to "insure" your trade.
Selling Calls against your position can help you to lower your cost basis (which lowers your risk) on the overall trade. You can do this monthly taking advantage of rapid Time Decay on Out of the Money Calls. This can even sometimes be done while the position is pulling back so that when it returns to the expected trend direction, you're in it with the recovery at an even lower price point.
Always remember that we have to protect our profits and look to minimize risk. Whether trading stocks or options, options can help you do both!
Angie C.
