Don't wait too long to take profits

We're all in this game to make money and when we see our options trade move into-the-money (i.e., the market price of the stock exceeds the strike price of the option), we are excited by the possibilities. After all, making 100%, 200%, 300% or even higher gains is one of the many benefits of trading options, as a small investment really can go a long way.

But sometimes, folks aren't happy with their current gains and wait just in case there's more money to be made. Remember, the bigger the win, the more you can lose. Take some profits off the table while still leaving a portion of your position in the markets so you can take advantage of any additional upside that might be left in the trade.

If you preserve a portion of your winnings from the beginning (for example, if the trade doubles in value from your entry price and you cash out 50% of your holdings), you know you have a shot at more profits, but you're also protected in case the market or the stock melts down during the life of your contract.

Bottom line: When you're profitable, take money off the table and call it what it is: a trade!