Lock In Profits

Locking in profits refers to the realization of previously unrealized gains accrued in a security by closing all or a portion of the holdings. When an investor holds an open position, they may accrue unrealized or paper gains or losses that aren’t realized until the position is closed. An example is when an investor that’s long a security can lock in profits by selling their stake for a gain. By doing this they are no longer subject to changes in the underlying.