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RE: TIB: Today I Bought (and Sold) - An Investors Journal #499 - Silver, US Bank, French Supermarket, Europe Index, US Homebuilding, Semiconductors, Cocoa, Wheat, Corn, Soybeans, 56 Percent Club, Crypto (BTC, ETH), Pharmaceuticals
What's your risk on the SLV trade, if the trade goes against you, do you get out of the trade at a certain unrealized loss?
Data is there. Net premium is 3.9% of the trade day closing price (3.8% of strike) - so that is the risk in the trade. I will exit as soon as price passes the sold call strike (20) if I am paying attention. The closer to expiry that happens the better the profit potential as trade has lost more time value.
I do not run an exit strategy for trades like this that go against me. Too often I have seen a trade drop 50% and then bounce back and reach the maximum. More disciplined options trades like to run a 50% loss of premium exit - choose a rule and run with it. Do not cry when a 50% loser becomes a 300% winner.