Protecting Option Profits
In this video, we will explore an option strategy that can provide protection for existing call option purchases if the underlying stock/ETF declines in price and at the same time, can increase the profit potential for your call option trade.
PowerTrend has produced a lot of profitable call option trades over the years. When you have a profitable call option trade should you hold the trade for further upside profit potential . . . Or do you take profits in case the stock declines in price with the possibility of a profitable option trade turning into a loss?
Learn how the Optioneering Team manages profitable trades by legging into a spread trade to help protect profits and also increase the profit potential of the existing call purchase.
The Team will demonstrate this spread strategy by examining an actual Utility ETF symbol XLU option trade. The advantages of this strategy for the XLU trade include:
- Providing downside protection that allows the XLU trade to profit it the stock is up, down, or flat at option expiration.
- Boosting the profit potential of the existing XLU trade by 53%
- Reducing the dollar risk in the XLU trade 40% from $474 to $284
Whenever you can profit when a stock/ETF price increases, decreases, or remains flat at option expiration, it will result in a higher percentage of winning trades, and this can make you a more successful trader.