what to do if a stock i bought for longterm suddenly starts to go up and up?

Question

i am an investor in Indian stocks.

Answer 1

I am not sure how it works in India, but here is what I would do in the USA.

1. Hold the stock long term, because that is your strategy, buy more if you think it will go higher.

2. When the stock has gone up a lot, sell a covered call on it, with an expiration date of at least 1 year from the purchase date, with a hit price at least 25% higher than the current price. And sell the covered call for at least 25% of the current price.

If the stock does not go up any more, the call will expire worthless, and you will get to keep that money from selling the call and the stock and dividends.

If the stock goes up 25%, it will sell at that high price automatically, and you will get to keep the money from selling the call and the dividends, and the profit from the sale, and the taxes are lower.

If the stock goes down, you will have made 25% on the covered call to reduce your losses.

Answer 2

Be careful. Indian stocks became overvalued. The P/E ratios are higher than any other emerging market. Infrastructure is also a problem in India and is really limiting growth. The long term prospects look excellent though, if you are prepared to experience some corrections along the way. Deciding whether to hold or sell really depends what your risk tolerance is.

Sometimes your stockbroker will allow you to put in a "bracketed" order.

You specify
1. a top price that you would be happy to sell at (e.g. 100% more than current price)
2. a trailing loss as a percentage e.g. 20% .The actual sell price is constantly adjusted to that it is always the specified percentage below the maximum price the stock reach.

Then your stock will be sold if the value hits your maximum price (1) or drops to your minimum price (2).

Lets say that you specify a trailing loss percentage of 20%. If the stock starts at 100 rupees, rises to 180 and then goes into free fall, the stock will be sold at 142 rupees (180 - 20%).

Answer 3

If you truly bought it for the long term and the reasons you bought it are still valid, you should hold onto it. But if you want to take profits, you might consider a "trailing stop." A simple way to do this is to give your broker an order to sell the stock on a "stop" at a certain percentage below the last closing price, say 5% (you might use a larger percentage if it is a very volatile stock). You can adjust this daily or weekly as the stock rises, always staying 5% below the last price. But you should never lower the stop -- only raise it closer to the market price.
You can also use technical factors to place a stop -- placing it at the last minor low, for example, or at the 50-day moving average. Or you can base your stop on volatility, but this would take a rather involved explanation.

Answer 4

Don't get too greedy; pick a price that you feel is a good enough profit and put an order to sell 1/2 of the stocks when it hits that price; Keep your eye on it constantly and read up on the stock to see if there's something "lurking" that may bring it down;

Answer 5

If its more then you think its worth sell before the price dropps again maby keep some of the shares in case they go up some more

Answer 6

Hold on to it,

When it starts peakng and leveling off, then sell.

Thats called making money off the stock market.