Trailing Stop % when in profit

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Old Nov 23, 2017, 1:52am   #1
 
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Trailing Stop % when in profit

Hi,

Let's say you've bought a Long Call that's now in profit by 30% and you want to place a Trailing Stop Loss, to cap you losses.

What is the suggested % to place the Trailing Stop below the current Option Bid Price? (Not on the Stock Price).

Obviously we'd need to take into account the volatility during opening hour of trade & trying to prevent whip-saw.

Many thanks.
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Old Nov 23, 2017, 4:24am   #2
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Originally Posted by rosey View Post
Hi,

Let's say you've bought a Long Call that's now in profit by 30% and you want to place a Trailing Stop Loss, to cap you losses.

What is the suggested % to place the Trailing Stop below the current Option Bid Price? (Not on the Stock Price).

Obviously we'd need to take into account the volatility during opening hour of trade & trying to prevent whip-saw.

Many thanks.
It is a question only you can answer as you are the one who knows the specific on whether it is long or short dated; in or out of the money; and the associated greeks (delta, vega, theta, gamma).
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Old Nov 23, 2017, 7:26am   #3
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I'm more and more convinced that plans to protect unrealised gains are put there more to protect the vendor or trainer supplying the strategy. This would apply to trailing stops.

Just as we are more afraid of big losses than we are pleased by big wins, this is a tactic to appease that human weakness. But its the tail wagging the dog. Loss of profit is far less important than loss of capital, and generating more profit is more important than limiting its loss.
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Old Nov 23, 2017, 8:35am   #4
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I'm more and more convinced that plans to protect unrealised gains are put there more to protect the vendor or trainer supplying the strategy. This would apply to trailing stops.

Just as we are more afraid of big losses than we are pleased by big wins, this is a tactic to appease that human weakness. But its the tail wagging the dog. Loss of profit is far less important than loss of capital, and generating more profit is more important than limiting its loss.
100% agree Tom

Any trading school or Academy (or whatever nonsense they call themselves these days) worth their salt is going to be real cute on teaching exit strategies .........

if a trader is dumb/lucky enough to get some good trades out of the course the academy will be keen to see them make a few small wins to justify the high fees and justify not having to give money back in the short term ......

N
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Old Nov 23, 2017, 8:39am   #5
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Quote:
Originally Posted by rosey View Post
Hi,

Let's say you've bought a Long Call that's now in profit by 30% and you want to place a Trailing Stop Loss, to cap you losses.

What is the suggested % to place the Trailing Stop below the current Option Bid Price? (Not on the Stock Price).

Obviously we'd need to take into account the volatility during opening hour of trade & trying to prevent whip-saw.

Many thanks.

rosey .....im not an options player ..........but if you are already in the game and live trading i would recommend you get out quick until you have such answers to these important questions ......you are not 100% in the game here ?

N
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Old Nov 23, 2017, 8:40am   #6
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its like in my game a scalper not knowing how to press the exit button .....they have only partial rules in play .....
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Old Nov 23, 2017, 9:34am   #7
Joined Oct 2008
I agree with the comments from the prior fine gents.
I don't do options, but as a naked directional trader I care 99% about every single tick until I'm in profit.
After break even (& achieving my full line) I'm so relaxed about price, I don't pay much attention to it sometimes for days on end (within reason)
I know that my style is probably very different to yours, but I do think that basic principles stay the same.
On a practical note I did once hear a successful CTA manager say he will never let a trade fall lower than 7% of it's own profit.
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Old Dec 21, 2017, 8:34am   #8
 
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You can always roll it up, taking some of the profit out and leaving room for it to continue to run.
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Old Apr 29, 2018, 8:32am   #9
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Trailing stops only work on swing trades I find. If it is day trading you just end up getting chopped up. The amount of big trend I have missed intraday using trails!
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