The Sept. 60 put that I recommended on FRO is trading for around 10.00 right now as of Friday's close. The entry price I used for the trade was 5.20 which was the open the day after I posted the trade. So that is close to 100% gain.
For beginning traders I think it is important to understand that every option you trade really has a risk of 100% loss. If you use a stop loss then you should not be losing 100% often, but realistically, most people hate to lose more than anything, and they move their stop order down or just don't use one. So it ends up that you could lose all the value if the trade goes against you.
For that reason, I think that beginning option traders should be using a system that will regularly result in winners of 100% or more when you are correct. Those big wins will counteract 100% losses at times. In fact if your winning percentage exceeds 50% and your average wins are 100% or more, you would still have an OK system even if you let all your losers go to zero or till whatever is left at expiration.
The flip side to selling at 100% gain is that the huge profit of an option really occurs when the delta rises to close to 1.00 and then the profit gains become more parabolic. To balance these factors, some recommend selling half your contracts for 100% gain to create a breakeven trade at worst. Then you are free to let the trade continue in hopes of catching a much bigger gain on the other half position. I think this is very reasonable for traders trading multiple contracts. If you are trading just one contract typically, then I think the best guideline to follow is to sell for either 100% gain or let it run till expiration. Pick one strategy and follow it consistently as the pros and cons will tend to balance out over time
Pete
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