What percentage stop would you use if you are doing a mental or actual stop set up? Would you base the stop at midpoint? Just trying to see what a reasonable stop is. Of course everyone has different tolerance levels.
A reasonable stop is one that's determined by the instrument, its volatility, and your own carefully researched, tested and proven risk management parameters. If that's too abstruse and unhelpful an answer to your (perfectly reasonable and good) question, then try this, but know first that it's only an example, not a definition: a reasonable stop is based just beyond the most recently formed swing high (short trades) or swing low (long trades) of the price on the same timeframe chart used for determining the entry. They do indeed ... but the suggestion above allows for that: you look at where the stop-loss would go (according to where the most recently formed swing-high/low is) and if it's too far from the entry-level for the position-sizing to be manageable according to your pre-defined, tested, proven risk management parameters, you don't take the trade. Simple enough? What matters is to work out your position-sizing after seeing where the chart determines the stop-loss would have to go ... not the other way around!
If trader entered the position and remained in it based on certain assumptions, then the reasonable stop is at the moment/price when/where his method indicates that those assumptions are no longer valid.
Options are too volatile for stops. Down 50% one day - up 200% the next day. Credit Spreads - No stops required. Debit Spreads - No stops required. Long option positions - No stops required. Butterflies - No stops required. Calender Spreads - No stops required. Short option positions - No stops required but approach with caution.
Thank you for the helpful information. Sometimes my stops seem to be too low and get closed out too early. I read some people say 1/2 of your entry to prevent an early close.
Are they long options or short? Are they in the money or out? Are they simple options or strategies? Are these liquid products or fairly illiquid? Based on what you said (as I have seen such suggestions somewhere else) I suspect you are looking at simple OTM long options but specifics will help. Also, see what others said + I do not think general formula such as close at 50% loss work very well. Option prices can change due to many reasons, underlying price being just one of them and if I was long options, I would not want to place hard stops in the system ... profit targets, maybe or rather definitely, but not stops.