Trailing Stop % when in profit

Nov 20, 2017
6
0
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#1
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.
 

Brumby

Well-known member
May 25, 2012
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#2
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).
 

tomorton

Well-known member
Feb 28, 2002
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Exeter
#3
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.
 

NVP

Well-known member
Jun 21, 2004
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fxcorrelator.com
#4
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 ...... :smart:

N
 

NVP

Well-known member
Jun 21, 2004
35,842
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223
west sussex, UK
fxcorrelator.com
#5
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
 

Jason101

Well-known member
Oct 9, 2008
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#7
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.
 
Apr 28, 2018
51
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#9
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!