InvestorQ : My option is profitable but the expiry is still 15 days away. What is the right time for me to book profits and move out of the position?
Lavanya Subramanian made post

My option is profitable but the expiry is still 15 days away. What is the right time for me to book profits and move out of the position?

Answer
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ishika Banerjee answered.
1 year ago


This is a basic reason why traders in options tend to lose money. Any option has two components viz. time value and intrinsic value. When the call or put option is out of the money then it is very likely to expire worthless at zero. If you hold these options too close to expiry then you are likely to see your options expire worthless. Time always works against the buyer of the option and hence set your target returns and exit when you sense the opportunity. As a matter of practice, avoid holding positions too close to the expiry. If you are getting your target returns earlier then there is no reason for you to not take profits out of the position early.