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Introduction to Trading and Investing with Options (Collection) by Michael C. Thomsett, W. Edward Olmstead, Guy Cohen

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4. Managing Profits and Losses

Everyone contends with short-term price fluctuations, and even the most conservative investor may be susceptible to profit-taking. Options can be employed to protect profits and even to take those profits without selling stock. On the other side of the short-term price question, options can be used effectively to eliminate loss positions through rescue strategies.

The conservative risk profile discourages short-term decisions, and speculation is contrary to your sensible investing philosophy. Your general buy-hold-sell rule is buy well-selected, high-quality stocks, hold for the long term, and sell only when the fundamentals change. This smart investing approach does not preclude protecting profits when ...

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