Yes exactly right mate. That was my point. The leverage with options is much greater than owning shares. However, with greater leverage also comes greater risk. While gains can be much higher, losses also can be much higher. Investors need to understand options well before taking a position, including exercise price, expiry date, current option price in relation to share price and company news catalyst potential for share price increases.
Agree with your rules too and particularly the importance of the second one. If you strongly believe in the reasons you bought a stock and the fundamentals haven't changed over time, look to take advantage on any share price weakness as this presents great opportunity to average down your buy in price.
I am also a strong believer in looking to enter a stock at what you consider to be a good buy in level also. A lot of investors buy on impulse and FOMO and ends in disappointment (even when buying good stocks) due to lack of patience.
PGD Price at posting:
35.5¢ Sentiment: Buy Disclosure: Held
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