ironchef,
I guess my approach is to try not to manage it too much, not because I'm lazy, but because I don't think it helps with what I am trading. With options, one often has to give something up to get into a more secure position, and repeatedly giving things up might not be worth it.
I have to consider whether my system is one that benefits from taking small profits here and there. I don't tend to trade things that do well that way, so I have more of a tendency to let things run. On a trade with a limited return such as a spread, yes, I may take profit at 90%+ of the possible profit. But on a trade with unlimited return, I usually let it run. For example, I like to trade DITM long calls--so deep that they have virtually no theta or vega. On the few occasions when they go to the moon, I want to be there. And yes, I have sometimes seen all or part of my unrealized profits disappear. But if backtesting shows me that I am better off in the long run by sitting on my hands, I must manage my trades by ignoring them for a while. When tempted to micromanage, I focus on some other work, go outside for a walk, or turn my attention to the endlessly entertaining political news in this country.
It is reasonable to take a small profit if I think conditions have changed with respect to the underlying or the market, so that I am now wrong. However, taking a small profit because I am scared is probably not a good reason. I know I will always be concerned that my profit may evaporate, but that's part of the game. I find it's best to try not to get bogged down in the intricacies of position adjustment. I think a better stance is to focus on the big picture (what I think about the underlying).
With options, one can sometimes take very large losses. Therefore, I need some large profits, too. If the prospect of a loss or the fear of losing an unrealized profit is too worrisome for me, I think that means I should be trading smaller positions. I have had to learn my risk tolerance (the hard way, like most people do) and how to trade accordingly, and I had to train myself, one trade a time, to follow a set of rules. It's funny how much harder it can be to do nothing than to do something.
Now, that said, I am not much of a countertrend, contrarian, or swing trader. Rules may be totally different for these approaches. I can't be helpful there; I guess trading that way doesn't suit my personality.
Trading is a little bit addicting. Until the addict admits that he cannot drink or take drugs in a responsible way, he will continue his harmful behavior. Until the trader admits that he does not know the future, he will continue to try to convince himself that he can guess what will happen next.
