Education · Lessons from the Byte
A good exit doesn't have to be the highest exit
It can be tempting to look back at the highest price an option subsequently reached and think that closing earlier meant leaving money on the table. But that uses information that wasn't available when the decision had to be made.
An exit plan gives you something different: a level decided in advance, before the movement of the position starts influencing your decision.
That matters particularly with weekly options. A position that has moved strongly can reverse quickly, while time value continues to decay as expiration approaches.
So the lesson we take from these two positions isn't that we should have known where the high would be. It's that having an exit plan gives you a way to act without needing to know.
This week's byte: A good exit doesn't have to be the highest exit.
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This lesson first appeared in Weekly Options Bytes, our free email from Ian Harvey’s options research desk.
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