There is a lot of subjectivity in life and in options trading. In both, there are lots of choices with many potential scenarios. As any trader knows, there are also lots of judgment calls and not a lot of certainty when it comes to options. There is, however, one move that can 100% improve your trading results.
What I am talking about is implementing profit taking orders as soon as you have your position on even if profits are not quite realistic in a day or two. Good-til-canceled (GTC) sell limits for debit positions and GTC buy limits for credit positions can be true game changers. It is not just about taking profit; it is about removing risk at the same time. With the position gone, risk for that position is also eliminated. Think about that for a minute or two.
Not So Easy to Do
How easy is it to put a profit taking order on? Not very, right? If you have the order in place, there is a chance it could be filled. If you do not, obviously there is no chance. Here’s the thing I like to tell option traders. There might be one instant in the day whether at the open or later in the session that the order could get filled. If the order is there already it will fill. Saying you will keep an eye on it is not the same because you may miss out on the moment.
If you haven’t learned by now, there are many decisions to be made as an option trader. This is a no-brainer and can absolutely improve your option trading results. There are not many other things you can do as an option trader with such absolute certainty. No ifs, ands or buts, have your profit taking order out there.