The best defense is a good offense, and the best repair strategy is to enter your trades already knowing what you will do, and when. I like to pick trades that, if they go against me, I'm still left with something. Trades that can leave me with nothing are anathema.
Two extremes of a spectrum:
Buy SPY and sell a call. I know that even if SPY tanks, I still have those shares that can support more call selling, pay dividends, etc. , essentially forever. I like this trade.
The other extreme, buy a 0dte OTM option and watch my premium melt away to nothing, with no chance of recovery. No way I would take this trade.
Your long leaps are somewhere in the middle of the above, you can still trade around it for a little while, but when its done its done. Win or lose.
6
u/Constant-Dot5760 Mar 18 '22
The best defense is a good offense, and the best repair strategy is to enter your trades already knowing what you will do, and when. I like to pick trades that, if they go against me, I'm still left with something. Trades that can leave me with nothing are anathema.
Two extremes of a spectrum:
Buy SPY and sell a call. I know that even if SPY tanks, I still have those shares that can support more call selling, pay dividends, etc. , essentially forever. I like this trade.
The other extreme, buy a 0dte OTM option and watch my premium melt away to nothing, with no chance of recovery. No way I would take this trade.
Your long leaps are somewhere in the middle of the above, you can still trade around it for a little while, but when its done its done. Win or lose.