Been trading for a while now and made some decent profits with ITM options. But I feel like I’m not maximizing my gains properly.
Sometimes I hold too long and watch profits disappear. Other times I exit too early and miss bigger moves.
How do you handle ITM positions? Do you have specific rules for when to close them out?
Close ITM positions at 60% profit maximum. Statistics show holding beyond this point reduces overall portfolio returns due to time decay acceleration.
Profit taking at 60-70% is solid advice, but you also need to watch time decay closely. ITM options lose value fast in the final days before expiration.
My rule is simple: if I’m up 50% or more and there’s less than 2 days left, I close immediately. Beyond that, I use a 20% trailing stop to protect gains while letting winners run.
The key is treating each trade like a business decision, not a lottery ticket. Most traders blow up because they turn winning trades into losing ones by holding too long.
The hardest part about ITM trades is fighting that voice telling you to hold for more profit when things are going well.
What works for me is taking partial profits around 50% and letting the rest ride with a trailing stop. This way you lock in some gains but still catch bigger moves if they happen.
Time decay becomes your friend with ITM options, but only if you’re not holding too close to expiration.
After losing $340 last month holding too long, I close at 65% profit automatically.
Three months ago I had an ITM trade on gold that was up 65% and I got greedy. Watched it expire worthless because I wanted more.
Now I close at 70% profit no matter what. Missing extra gains hurts way less than losing everything.
Set your exit rule before entering the trade when emotions aren’t clouding your judgment.