Taking Profits Incrementally

During the recent market rally, my company stock has risen significantly, over 25% since mid 2012.  I'm taking advantage of the gains by executing  my company stock options.  However, I've decided not to execute all the stock options at once.   Rather, I've been executing 3-8% of the position at $1-2 increasing increments of limit prices.   That way I reduce some of the risk associated with a pullback and also participate in further gains.

Of course, this approach won't get maximum profits from selling at the top.  However, I long ago resigned myself to never selling at the peak :-)  For me, the next best approach is to be able to sell some near the peak.  So now I will sell part of a position when I think the price is near a peak.  If the stock keeps going up, I will sell an additional part of the position.  This continues until I run out of stock or the price starts declining.

Psychologically, this is a win/win selling approach for me.  If the stock continues to rise, part of the position continues to gain.   If the stock declines, then I have locked in higher profit for part of the position.  Either way, I've made a good profit that validates the purchase of the stock.

For more on Strategies and Plans Ideas, check back every Monday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC