Capital Management: Locking in Profits While Keeping Your Money Working
When your stock position reaches a 33.46% profit, it’s tempting to ride the wave, hoping for even bigger gains. However, smart investors know that capital management is key to long-term success. Instead of simply holding or selling everything at once, a structured exit strategy can help you secure profits while keeping your money actively working.
Selling a Portion to Lock in Profits
A great strategy is to sell one-third of your position at a high price. This approach ensures that you realize some gains without completely exiting a winning trade. By locking in profits, you create a cash reserve that can be redeployed efficiently. Selling in increments prevents regret—if the stock continues climbing, you still have exposure; if it drops, you have cash to buy at a lower price.
In this example, selling 1/3 of the Palantir (PLTR) position at $105.24 after a 33.46% gain locks in a strong profit while keeping two-thirds of the position intact. This reduces risk while maintaining potential upside.
Reinvesting Through Selling Puts
After selling a portion of your shares, you have cash on hand. Instead of letting it sit idle, you can sell a put option at the price where you sold the shares—$105.24. This strategy allows you to:
✔ Earn premium income while waiting for a potential re-entry.
✔ Buy back shares at a discount if the price drops.
✔ Generate a return on cash instead of letting it sit uninvested.
For example, selling a PLTR put with a $105 strike price could bring in extra premium while positioning you to buy back the stock if it dips. If PLTR stays above $105, you simply keep the premium as profit.
Buying Back on a Dip
Another option is to wait for a correction and repurchase the shares at a lower price. Stocks often experience pullbacks after strong rallies, so having cash ready allows you to capitalize on market fluctuations. If PLTR retraces to $100 or lower, you can rebuy shares cheaper than you initially sold them, effectively increasing your share count without adding new capital.
Conclusion
Managing capital effectively means balancing profit-taking with reinvestment. By selling a portion at a high, then redeploying cash through put selling or strategic repurchases, you ensure your money is always working for you. This disciplined approach maximizes returns while reducing risk, allowing you to stay ahead in the market.@MillionaireTiger
@TigerStars $Palantir Technologies Inc.(PLTR)$
| Side | Price | Realized P&L |
|---|---|---|
| Sell Close | 105.24 | +33.46% Closed |
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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