Option Trading Loss Recovery Strategies

Michael C. Thomsett

In volatile markets, the inevitable paper losses tie up capital and prevent you from moving ahead. So what do you do? Do you just wait and hope that the market price rebounds? Do you cut your losses and move your cash to more promising stocks? Or are there other choices?

As a first qualifier in answering this question, the following is premised on the assumption that you have examined the company and consider it a worthwhile investment. If you do not, then you definitely should sell now and move capital to more suitable investments. However, if you want to get back your paper losses and either keep money in the stock or just get your initial investment back, you can use options as part ...

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