ROFLMAO... My apologies, I actually signed back on to expand on that as you are one of the guys really trying to learn. Too many years where I became accustomed to saying things without expecting to be asked questions in return. Why would it make any difference if I want to sell 10's and put it in as an order, or waited for it to trade there and then execute it on my own? I could argue it removes the fight you have with yourself, and is actually more disciplined, since you placed that stop there when you were logical, and for a purpose, (i.e, my negative gamma will be too much at a x% move and I NEED to take in my delta for risk purposes, IF we get to that level) and when you are floating around that stop, my experience suggests your logic will muddle and you will be thinking of 500 dumbass excuses why you shouldn't trade there, all based on emotions, and worse, emotions while losing. Then we could get into how any stop is different than any order put in on an algo? Swiping a broad brush, and saying if your stop gets hit you don't know how to trade, Yes, it's absolutely, undeniably, over the top, leaving no doubts, moronic.
If you are a good stock picker/ timer it's not weird at all. So you are trading a fixed dollar amount,which means you will buy more OTM options thsn ITM.. And that shoukd imply you buy more spreads than the corresponding naked call of your long leg..So apparantly you do adjust delta's..
Got it. The reason I don't like hitting stops is because I appear to gravitate towards short term market timing. I have a few setups that tell me within minutes or hours whether my timing was correct. If my timing is not correct I just get out. I don't wait for stops. Do I still put on stops? Yes. But that's just in case I forget to manage a trade or I get in and a comet hits new York. Trump tweets I don't worry about.
This conversation has made me look more at delta, thanks. I'm not sure if it will make me do anything different BUT I'd like some suggestions on how to choose the short leg of a spread if you have any. I generally do some gut check which is a function of the target and max loss.
I typically do not trade options directionally other than some light ratio spreads and flys. but in your case,since you trade with an ATR profit stop,verticals make sense. I would look to a short strike that offsets at least half the Theta of the long and trades > than 20 percent of the long leg. Not sure what your starting point is,but for me its how much $ do I want to risk/ATR..So if I am willing to risk 1,000 and the ATR is 10 on a 100 dollar stock,I can get long 100 shares....In your case,you would look to have option deltas up to 1.It could be 1 deep call,2 0.50 verticals,4 o.25 verticals etc...Ultimately,I would run an up/down 1-3 ATR move and see which P/L graph works best for your stomach
Its really just a ball park comfort level..If you run a rough and dirty 5% move in the stock/index price,you can eyeball the option chain and see how your spread moves x percent up/x percent down..Only you can decide what Risk Reward ratio is best for you..
That's pretty much what I do so it's good to have confirmation from someone who knows what they are doing better than me.