Managing a trade that gets tested is one of the most important skills an options trader can learn. And entering a trade without a risk management plan is a recipe for a short-term trading career.
Come learn about 7 different ways to manage risk as you enter a trade and as you adjust tested positions. We will discuss a few real-life trades and how we managed the risk towards a profitable trade.
HAVE A PLAN - 3 Ways to Manage Risk Before you make your Option Trades:
1. Plan your trade based upon DELTA.
2. Number of Contracts, Allowed and Max Loss perimeters preset before entering the trades.
3. Diversification of Underlying (non-correlated)
FLEXIBILITY INSIDE OF YOUR PLAN - 2 Ways to Manage Risk when a position is tested.
4. Adjustments for tested positions. Roll up, Roll Away, Roll Out, Take the Loss and Move on.
5. Duration trumps Direction – Case study on one or two real-life trades
MANAGING FOR THE UNEXPECTED - 2 Ways to Manage Against Black Swans:
6. Buy Very OTM Puts in an Index
7. Hold Real Assets like Gold and Silver or Options in Gold
