Point, counterpoint. -- you can debate this issue forever;
It's up to the trader...to come to his or her Own conclusions...depending on their strategy, own style, and market viewpoints.
Options stoploss limit order
- Thread starter stockoptionstrader
- Start date
Point, counterpoint. -- you can debate this issue forever;
It's up to the trader...to come to his or her Own conclusions...depending on their strategy, own style, and market viewpoints.
Yes I understand, but you have to make room for your limit order, so when your stop gets hit, then your limit has also a chance to get filled. I understand if prices fall very fast it will not be easy.
I just want to use them in this way: My option is up 100%, there is a big down day in the overal markets, prices are falling steadily towards the end of the trading day. My option first is down 20% at the open of the trading day and at the close my option is down 50%.I would place my stop loss limit order around the value of 70% value of my option. In this way I still have 70% of my value, If I hadn't my stop loss limit I would be down 50%. It's like this I want to use it. I don't have time to monitor it constantly.
That's a litte bit too complicated for me, I don't want to write or sell options. I just want to buy and sell call options. How would this limit my risk with a legged vertical spread?
I may have missunderstoood: I assumed your order was a GTC, and not one you deploy each day with your new stop limit price. If so, this may work fine for you. Note: some brokerages allow you to create orders like the one I mentioned earlier, where say you trigger on the underlying falling below a set price target, then use that condition to trigger a limit order based on an offset from the current MID (or bid, or ask, etc) for that Option. This way you can "...make room for your limit order..." dynamically at the time you need it.
Below is an example for a GTC order I have on at TOS for reference:
BUY +1 VERTICAL SPX 100 (Weeklys) 31 AUG 16 2100/2075 PUT @MARK+.15 LMT GTC WHEN SPX MARK AT OR BELOW 2135.00 [TO CLOSE/TO CLOSE]
TSL = trailing stop loss limit (or market) order using percentage stop.
The fact that you don't know much about a complicated leveraged financial instrument which has been around for thousands of years, and the fact that you have chosen "stockoptionstrader" as your alias, tells me that you will lose every penny in the Options market.
Enjoy!
You are trying to use stock trading concepts in trading options. This will kill you. The problem is options are not stocks and in order to trade options you need to have at least the most fundamental concepts under control. It would appear you do not.
Having said that, you CAN use deep in the money, far in the future options with high delta to simulate buying stocks:
http://www.wallstreetdaily.com/2012...-options-offer-a-solid-alternative-to-stocks/
Then you can trade those options like they were stocks. Just be sure you have the concept of theta well under control.
Having said that, you CAN use deep in the money, far in the future options with high delta to simulate buying stocks:
http://www.wallstreetdaily.com/2012...-options-offer-a-solid-alternative-to-stocks/
Then you can trade those options like they were stocks. Just be sure you have the concept of theta well under control.
My alias doesn't say anything about me.
So in your opinion, buying simple puts and calls and keeping it simple will not work.
So only if you know all the more advanced strategies that exist in option trading, you can make money.
Why make it complicated if things can work in a simple way.
Old Nemesis had a decent suggestion and my earlier suggestion might work...Either way, you should consider moving further out time wise if losing 50-70% of the options premium is a possibility and/or consider putting on a spread...If you aren't watching these weekly options frequently AND you are holding them overnight, well things can get very volatile...
There is so much freely available info out there, it shouldn't be difficult to come up with a solution that will work better than puking out the options position when its down 70%.
You are right, my options have mostly an expiration date 3-4 months further, I plan on always selling them at least 2 strike dates (3 weeks) before my expiration, so volatility is reduced.