http://www.options-trading-education.com/21711/use-puts-to-protect-profits/ Use Puts to Protect Profits A good idea when you have a stock that has had a good run up is to use puts to protect profits. When the stock market has had a good run it is always time for the investor to look to protecting his profits. In fact, the old saying is that you do not have a profit unless you take a profit. There are two ways to do this. You can sell stock or you can use puts to protect profits. When the investor thinks that a stock still has a fair amount of upside potential but is also due for a temporary correction he can use puts to protect profits. Only when an investor thinks that a stock is entirely overbought and is due for a permanent fall in price will he sell stock and totally exit the position. Buying puts on a rapidly rising stock in a volatile market has been a successful strategy in long term investing over the years. This is an especially valuable strategy for traders and investors who have gotten into stocks very early and have seen them grow substantially. By buying puts in stock options trading they retain the stock in case it goes up farther in price but buy insurance against a possible collapse in the stock price. Use Puts to Protect Profits and Calls to Guarantee a Piece of Profits It makes sense to use puts to protect profits in a volatile market. In this case the stock prices may go up and may go down. If a trader wants to trade options on such a stock buying calls and puts on the same stock with the same expiration date covers both the possibility of a rise and a fall in stock price. The trader pays two premiums but incurs no further risk. This strategy is called a long straddle. When one owns the stock in question then there is no need for calls on the stock but to use puts to protect profits still makes sense. Smart traders and investors can use technical analysis tools such as Candlestick pattern formations to accurately anticipate a market reversal. By astute Candlestick analysis the trader will have his puts, and his peace of mind, in place when the market goes crazy.

1. Use Puts to
Protect Profits

2. A good idea when you have a stock that has
had a good run up is to use puts to protect
profits.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

3. When the stock market has had a good run
it is always time for the investor to look to
protecting his profits.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

4. Before We Continue…
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5. In fact, the old saying is that you do not have
a profit unless you take a profit.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

6. There are two ways to do this. You can sell
stock or you can use puts to protect profits.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

7. When the investor thinks that a stock still
has a fair amount of upside potential but is
also due for a temporary correction he can
use puts to protect profits.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

8. Only when an investor thinks that a stock is
entirely overbought and is due for a
permanent fall in price will he sell stock and
totally exit the position.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

9. Buying puts on a rapidly rising stock in a
volatile market has been a successful
strategy in long term investing over the
years.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

10. This is an especially valuable strategy for
traders and investors who have gotten into
stocks very early and have seen them grow
substantially.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

11. By buying puts in stock options trading they
retain the stock in case it goes up farther in
price but buy insurance against a possible
collapse in the stock price.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

12. Use Puts to Protect
Profits and Calls to
Guarantee a Piece of
Profits
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

13. It makes sense to use puts to protect profits
in a volatile market.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

14. In this case the stock prices may go up and
may go down.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

15. If a trader wants to trade options on such a
stock buying calls and puts on the same
stock with the same expiration date covers
both the possibility of a rise and a fall in
stock price.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

16. The trader pays two premiums but incurs no
further risk. This strategy is called a long
straddle.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

17. When one owns the stock in question then
there is no need for calls on the stock but to
use puts to protect profits still makes sense.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

18. Smart traders and investors can use
technical analysis tools such as Candlestick
pattern formations to accurately anticipate a
market reversal.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

19. By astute Candlestick analysis the trader will
have his puts, and his peace of mind, in
place when the market goes crazy.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

20. Careful Analysis
Pays Off
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

21. When everyone seems to want to buy
stock, regardless of price, the investor who
had the foresight through fundamental
analysis of a stock as well as technical
analysis of the market to buy stock early will
be looking to take his profit.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

22. So, why doesn’t the investor or trader just
sell the stock?
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

23. Because market sentiment is still positive
and the stock may still go up substantially in
price.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

24. Using Candlestick chart analysis the
investor knows that the stock will go up in
price and knows that the price will
correct, probably very substantially.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

25. Selling stock will forego profits in the last
surge in the stock price.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

26. Waiting too long will mean incurring a loss.
Using a put on the stock guarantees that the
investor will sell the stock at the strike price,
the contract price, even after the stock has
fallen in price!
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

27. He can then just keep his profits or he can
now repurchase the stock at the now lower
spot price, the new market price.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/

28. If his Candlestick chart formations predict a
renewed rise in stock price this is what he
will profitably do.
http://www.options-tradingeducation.com/21711/use-puts-to-protect-profits/