Secret 71 AVOID REPAIR STRATEGIES
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When a trade goes bad, many experienced option traders use
repair strategies. They will add an option leg to protect a position
or use a variety of other option strategies to avoid taking a loss.
There are some situations where repair strategies buy you
some time for the position to move in your favor, but in many
cases the trader just does not want to take a loss, and all the repair
strategy does is increase his or her trading activity—a game
that you want to avoid.
One of the greatest errors made by an option trader is his inability
to take a loss. This means that when your option trade
goes astray, cut your losses! Don’t use a repair strategy.
When a trade goes bad, many experienced option traders use
repair strategies. They will add an option leg to protect a position
or use a variety of other option strategies to avoid taking a loss.
There are some situations where repair strategies buy you
some time for the position to move in your favor, but in many
cases the trader just does not want to take a loss, and all the repair
strategy does is increase his or her trading activity—a game
that you want to avoid.
One of the greatest errors made by an option trader is his inability
to take a loss. This means that when your option trade
goes astray, cut your losses! Don’t use a repair strategy.