Respect risks

Respecting risks is a basic requirement for a successful trader in the market. Those who do not show enough respect for the risk will be punished by the risk, sooner or later. Victor Niederholf escaped from many risky high-stake trades, but he finally fell down in the Asian crisis.

Risk can can be evaluated by some rules of thumb. For instance, if one is short of a stock, he can imagine this stock will be taken over overnight. Or,  if this is a bio stcok,  one can imagine if it will have a FDA approval next day.

For a bull calendar, one should not take out long  legs and leave short calls overnight. As a management of risk, one may consider to close long positions partially and add them back later.