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Chapter 4. Managing Profits and Losses > Overcoming the Profit-Taking Problem

Overcoming the Profit-Taking Problem

The debate about whether or not it is conservative to use options depends on the timing and motives behind the decision. Of course, buying options purely to speculate would be inconsistent with your conservative goals.

As a starting point in this discussion, we must identify the lowest likely price level for the stock. Support is a technical term, of course, and most conservative investors do not use support and resistance as decision-making tools. However, an understanding of support level within your conservative risk profile helps you to coordinate option strategies that enable profit taking without needing to sell stock.


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