This is something I've given a little thought to. Most stops are about 8% below the price after the breakout. In other words, a loser is an underlying that is eventually exited at 8% loss. Usually no more than that, sometimes a little less, maybe 5% min. Since the point of using options is to get higher gains than would be possible with stock purchases (at least it would be my goal), I think the emphasis in strategy should be in mitigating the hit on the portfolio from losers. To that end, it occurs to me that buying ITM calls at a price point of about 7% below the current price would give decent leverage, while preserving capital during losses the best. That's one leg. Now what I wonder is if there are other legs that can enhance this strategy. Perhaps the long call being 3-6 months out, while having a short call opened near or just above the strike at a shorter expiration (1 month for every 3 on the long). So if the stock starts out weak after it's breakout, you can get a little profit on that, and once you exit, you get both the profit from the short call you bought back and some premium on your long call which is now at the strike. Obviously this can hinder profits to have the short call the first month of your position. But I don't have a program to calculate the total risk on a spread vs it's reward. If anyone wants to point at one (freer the better ) go for it. Chime in.
============== May work well, if one gets in a trend somewhat early Not sure i would do that in DEC, not a prediction This current uptrend is quite mature, may get more mature. Wisdom is profitable to direct