In this final installment (for now), I'll share more of my ideas about trading, and options trading in particular. The purpose is to provide guidance for readers. I'm not suggesting that you agree with, and adopt, all (or any) of these ideas. Instead the purpose is to get you thinking about your own philosophy of trading and why my ideas may or may not be appropriate for you.
The bottom line is there's more to option trading than merely slapping on a position and then waiting for the options to expire.
1) Make the best decision you can at the time the decision must be made. Do not berate yourself if it turns out not to be the winning decision.
2) Stay within your comfort zone. Never 'hate' any position you own. It's easy to exit and find a better trade.
3) "It's not good enough to find winning trading techniques; one has to continually
adapt these techniques to an ever-changing environment." So says, Dr. Brett – and I agree.
4) Don't depend on 'hope' to salvage a bad position. Use your intelligence to make a good trading/risk management decision.
5) I find that it's too risky to try to earn every every last nickel from a trade. Exiting a position early locks in profits and gives you a quiet period with no risk.
6) Don't sell naked options. The exception is for investors who want to buy stocks as prices decline. For those investors only, writing naked puts is a satisfactory strategy.
7) Don't use options to gamble.
There's always more to say on any topic. If you are so inclined, please share any of your basic trading tenets.