Option Strategy – Long Stock; Stock UP/ DOWN since Purchase – what next?

Long Stock, Stock UP since purchase


Next steps

1. Take no action – monitor price and change strategy if price outlook sours
2. If want to sell at my Target Price –> write Covered Calls
    – look for Strikes = stock target price, short time to expiration, high option premium
    – at least gain premium from selling
3. Buy Protective Put to protect downside, but require cash outlay to purchase
    – protective put will “kick in” when price drops to strike price
    – “insurance” is valid until expiration date

*Credit: OIC Beginners – Managing Stock Positions

Long Stock, Stock DOWN since purchase

Next steps

If stock is DOWN 5% to 10% since purchase
1. Sell the stock – cut loss
2. Take no action – might be market adjustment. 
    If I don’t see any news and outlook on the firm remains unchanged. It is OK to ride out the downside
3. Write Covered Calls
    – sell to someone the right to purchase the stock at the strike price within the time frame


 If stock is DOWN 10% to 15% since purchase
1. Sell the stock – cut loss
2. Take no action – might be market adjustment. 
     If I don’t see any news and outlook on the firm remains unchanged. It is OK to ride out the downside
3. Repair – “Double Up” 
i.e. purchase the same number of shares at the lower price 
(Pro) –  to reduce Average Cost
(Cons) – double the shares, double the loss
3. Write Covered Calls
Which method to choose?    –> see the yield (options calculator)


 If stock is DOWN 20% to 25% since purchase
1. sometimes when I cannot choose the suitable priced short term option  –> try LEAPS


*Credit: Managing Stock Positions