Exit plan
At what price or on what date you close, written before entering. An option can run out of time while you wait to be proved right.
In the chapter
The decisions, in order
From the same chapter
- Directional thesisWhat you expect the underlying to do, with a horizon and a size. Without all three you cannot choose strike or expiry: only buy for the sake of buying.
- Position sizingHow many contracts, decided from the maximum loss you accept. Worked out before opening; after that it is negotiating with yourself.