Trading without stop loss using options

[foroom lluzers]

Trades without stops will occasionaly lose very heavily , the losses from this type of trading will wipe out several months of profits.Placing stops is a double edged sword , stops are hit either when bucket shops /spreadbetting brokers look for stops or when markets become extremly volatile.Using stops can result in stops getting taken out , and then to make things worse, the price goes without you.


Using a weekly or monthly put option for a long trade or a call option for a short position , is an alternative .There is the cost of the options to be deducted from profits , but this cost gives the holding power to hold on to your trade , for almost a week or month.

As an example
weekly dax put long cost 34 strike 12400
long cash dax 12463

See image


You need a lot a patience ,to wait for the trade and to run your profits.

Read following to experience and understand stops and chaos.

http://www.trade2win.com/articles/1610-alternative-stop-loss

http://www.trade2win.com/boards/educational-resources/96228-power-now.html

http://www.trade2win.com/boards/technical-analysis/16367-wheres-best-place-stop-how-trade-stop.html

http://www.trade2win.com/boards/trading-systems/91296-no-stop-loss-system-3.html

 

[Convergence]

was looking at the forum board saw 2 threads:;Trading without stops' and thought "Noooooo.. don't do it!", I couldn't even bring myself to look and then saw yours ..'with Options' now thats far more sensible I thought

You using IG? Are your cash or futures positions settled/squared in the same trading account as your options insurance? and what options u using? vanilla?, barrier? what type? thx

 

[Convergence]

I read some of your options strategy somewhere you just kind of double down and it kind of makes sense but what happens in a sigma 9? remember LTCM?

 

[Convergence]

and also (sorry for questions but I'm genuinely interested) How do you view the trade? as a cash/ futures position with an options hedge or as an Options Trade hedged in the cash market?

 

[foroom lluzers]

was looking at the forum board saw 2 threads:;Trading without stops' and thought "Noooooo.. don't do it!", I couldn't even bring myself to look and then saw yours ..'with Options' now thats far more sensible I thought

You using IG? Are your cash or futures positions settled/squared in the same trading account as your options insurance? and what options u using? vanilla?, barrier? what type? thx

Vanilla options mainly weekly options .

I use cash which never expire and weekly expire on fridays at 16.30

 

[foroom lluzers]

I read some of your options strategy somewhere you just kind of double down and it kind of makes sense but what happens in a sigma 9? remember LTCM?

They are covered by options ,limited risk .

 

[Convergence]

They are covered by options ,limited risk .

Thx for answers

 

[foroom lluzers]

Good article here

http://www.trade2win.com/articles/1320-avoid-stress-when-managing-exits