DEFINITION of 'Follow-Up Action'

Any subsequent trading that affects an established position in a security or derivative. Follow-up actions are taken to change the amount of exposure an investor has in a position, or to limit a strategy's losses or profits.

BREAKING DOWN 'Follow-Up Action'

For example, an investor who is long in shares of Company XYZ may be nervous about future losses. He or she could take the follow-up action of purchasing a put option for the stock, which would minimize losses in the event of a downturn.

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