There are many thoughts about how to profit-take from this. Many would wait to receive the cash payout and then sell the share. That way, the profit of RM1.35 is guaranteed. If the share is then sold for anything above RM2, great, even more profit is made. However, the risk is also that the selling price at that time may well be below RM2 or it may be the case that there are no buyers for the share you want to sell.
On the other hand, there is also the option to sell the share now at its high of RM3.30 and forego the cash payout. This would ensure an equally handsome profit of RM1.30.
Which do you think is a better option to take? In the first option, the upside is that the share will still trade above my buying price at RM2 after the cash payout and I can still take in a little profit on top of the RM1.35. However, if it trades below RM2, then I only stand to gain the RM1.35 and have the rest of my principal stuck in that stock indefinitely.
If I take the second option, it is the most prudent, guaranteeing that I get back not only my principal but the profits too. But if the price of the share trades above RM2 after the payout, I will have no chance of anymore profit-taking.
Which type of an investor are you, the risk-taker (therefore more greedy on the returns!) and go for option 1, or the prudent investor who would quickly take home a nice profit now and quit the game? I have not decided which investor I am right now. But I plan to be decided by Monday…what would you do?
{ 3 comments… read them below or add one }
read your own post again.
you are answering your own question, why bother to ask your readers?
That is a dilemma, however imho the option 2 looks more ideal. Make the cut while it is still profitable. The returns can be used later for other investments. Opportunity loss rather than real loss. Just my thought.
Pandankia, 2nd opinions never hurt, and haven’t you had moments when you sometimes want to know if what you want to do is what others would do too?
Anonymous, thanks for the constructive feedback. I took your advise and sold at a relatively good offer today!