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Understanding Options 2E, 2nd Edition by Michael Sincere

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16

Managing Your Put Position

In this chapter, I discuss ways to manage your put position and some of the decisions you have to make. Since you already know how to buy calls, this chapter should be relatively easy. After all, managing a put position is similar to managing a call position. The hard part, as always, is exiting the position with profits, which is why it’s essential that you have a trading plan.

And now let’s review some of the risks you take when you are buying puts for speculation.

The Risks of Buying Puts

The advantage of buying puts is that losses are limited while your profit potential is substantial. However, as I said before, the risk of buying puts is the same as that for buying calls: the stock will not move in your favor, ...

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