Tackle Today: Long Put Profit Targets
March 11, 2022
«Take Aim.»
Traders,
Let’s continue the trade plan we began for long puts. Specifically, we assumed you purchased a 2+ month ITM put option for $3. Now, suppose you’re right. The stock falls, boosting the value of the put from $3 to $4.50, netting you a 50% gain. What now?
When it comes to setting profit targets, there are 3 common approaches.
① First, use technical analysis and focus on prior support zones or expected moves to forecast when to ring the register. For instance, if you bought a put at resistance based on a bear retracement pattern, your target might be the previous pivot low. Long puts are similar to short stock, so you can use similar rules for trade management.
② Second, if you’d rather focus on the amount of gain in the put option, then target a 50% to 100% profit.
③ Third, rather than exiting the entire trade at a target, you could make one of multiple adjustments to reduce risk while remaining open to further gains. You could roll down the put to a lower strike. Or morph to a bear put spread by selling a lower strike put against the one you own.
🛑 Upcoming Options 101 Webinar: How to Swing Trade Long Calls and Long Puts with Coach Tyler Craig | March 14th, 2022 at 8:30 PM EST on YouTube
This next YouTube training will be focused on swing trading calls and puts using the S.T.E.P Swing Trading System. In our last webinar, we introduced the topic from a high level. This time, we’re building trade examples and focusing on how to enter and manage long call and long put trades.
In this webinar you will learn:
✅ What is Swing Trading
✅ The Long Call Strategy
✅ The Long Put Strategy
✅ Reward to Risk Expectations
✅ The Best Chart Patterns for Long Calls & Long Puts
✅ Case Studies
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