6 Options Expiration Day Traps to Avoid

Take the following steps to avoid any unpleasant surprises

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#5 Don’t Hold a Position to the Bitter End

expiration sign 6 Options Expiration Day Traps to Avoid

It’s not easy to let go when you bought options. You paid a decent premium for those options and now they may have declined down to half that price. That’s not the point. You bought those options for a reason. The only question to answer is this: Does that reason still apply? Do you still anticipate the stock move you had hoped would happen?

If there is no good reason to hold, cut your losses and sell out those options before they fade to zero.

Is the shoe on the other foot? Did you sell that option, or spreads, at a good price and then see the premium erode and your account balance rise? Is that short position priced near zero? What are you waiting for? Is there enough remaining reward to hold onto the position, and with it, the risk? Let some other hero have those last couple of nickels.

Don’t take big risk unless there’s a big reward. It’s not a good plan to hold those options until expiration, especially when it’s weeks away.


Article printed from InvestorPlace Media, http://investorplace.com/2012/06/options-expiration-day-mistakes-to-avoid/.

©2014 InvestorPlace Media, LLC

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