Hi all,
So let's say you get lucky and buy a certain stock for very cheap many years ago.
Today it's up like 10x and you have huge unrealized gains. You're concerned that its price may go down because it does feel like it's overbought but you also like the company and are happy to keep it for the long term.
Question: What's the best strategy to protect your gains in case the stock takes a sudden dive of >20%?
If you sell a bunch now, you'll pay 20% as LT Cap Gains — so that sucks you might as well keep it because even if it drops <20% you're still better off holding the stock. Also guarantees no further growth,
You can set a trailing stop loss at 20% but it seems like those can get triggered for the wrong reasons.
Fidelity also has a bunch of conditional exit plans like “One Cancels the Other” — but it's not clear how to use those.
Buy put options? Is this cost effective?
Leave a Reply