This is a FullyInformed Members strategy article. A recent discussion on the FullyInformed Yahoo Forum centered on an investor’s questions regarding his naked puts trade on Cisco Stock. With the naked puts still caught in the money and Dec 21 options expiry looming, this investor wondered what forum members thought he should do. The answer to his trade though could have been handled from the outset through the use of a rolling stop-loss.
Profit and Protect – Rolling Stop-Loss
There is a lot to like about using a rolling stop-loss when selling options. This strategy article discusses key aspects of this method of protecting a position while also securing profits. Included is a discussion of the advantages of using leap options with a rolling stop-loss. This method can be used against many option trading positions and is particularly useful for those selling naked options as a means of limiting losses.
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