50% stop loss on long options?

Is this a good rule of thumb to follow if the market moves against you so you don't lose every penny on the long options?

 

my position size is my stop loss. every time ive actually used a stop on options the fill was so bad it wasnt even worth using it.

 

There's no such thing as a rule of thumb.

 

I've often wondered about this myself.

Does it make sense to have a conditional GTC order in place so that if the underlying reaches a price that invalidates the trade, your option position is closed at market?

 

Maybe the more experienced traders can comment on this , but I was trading an itm call on mos worth 7.90

of course it went down and not up. Based on fundamentals and technicals I didn't panick, since I was more concerned with the price of th underlying, and where it was. If it went too low and I felt like it wouldn't recover before expiry then ID close. But no such thng happened.

It was worth as little as 2.10 I think at one point but I hung on for a few weeks to close at 9.00

so anyway, 50% stop would have made me a losing trade

 

Tell that to Caesar!

 

If your call value had gone to zero for a total loss, you'd would be telling us how that stop loss saved you a bundle

As MTE said, there is no rule of thumb. With some trades, you're going to make perfect decisions. With others, you're going to screw them up so bad that you're going to wish you had played chess or bridge

What works for one may have no bearing for another. In the end, it's the bottom line that counts.

 

^

touché... I guess I have to experience it.

I had a stop on a butterfly that went wrong, and it triggered, got me out at 50% loss instead of 100%...

I guess it's entry and exit point, easy to say and hard to do, especially when its going in your favour.

but I don't claim to be experienced and have much to learn.

 

The rule of thumb used to be a real rule in the US. It stated that you were allowed to beat your wife with anything, so long as it wasn't bigger than your thumb. If it was, then you were abusing here, otherwise you were just giving her what she deserved.

I think the same is true with your stop loss. Give you option what it deserves - ex. don't put it where everyone else would - but don't abuse it.

 

My exit points are determined by the underlying. I have targets for the underlying above and below the current price of the underlying at which I sell the option regardless of the price of the option at the time of sale.

Joe.