Curbing Greed while trading options

[sandy81]

Hi Everyone,
I am new to options trading and have so far lost more money than I have made..one of the reasons I have identified is not booking profits even when there is significant profit, assuming that or hoping it will go up further.
For example I bought nifty 8000 put in the beginning of jan series at around 66..recently after the mega 1 day crash the price of the option had touched 106 .. but I failed to book profit and it is now down to sub 30 levels. I am still holding it though..
So, my question is whether to keep a target or fixed percentage of profit after which I should exit immediately or to wait till the underlying price in this case nifty falls below 8000.
I have lost many profitable trading opportunities because of this dilemma..
Please suggest me the best option (pun intended)

Thank you

 

[badarivt]

Use stop loss. If your Rs 60 option is trading at Rs 100, put a stop loss of say Rs 90 and keep moving the SL with the price. Wish my option moves from Rs 60 to 106. Not happening

 

[Somatung]

Hi Sandy81

May I ask: Does the loss even have any affect on you or you just take it?

 

[yak2444]

HI
first things first

If u r trading naked options then take profit of 75% contracts when u feel ur profiting

leave remaining with trailing SL

if combinations wait till expiry

yak

 

[Somatung]

HI
first things first

If u r trading naked options then take profit of 75% contracts when u feel ur profiting

leave remaining with trailing SL

if combinations wait till expiry

yak

Hi Yak2444

I love and respect your above comment.

Still: I guess you have to go a bit deeper into the subject you mentioned.

So let me point to if from a perspective of not knowing what you mean in dept with all my respect to what you posted:

Let's say I have a position of 100 lots. Now your recommendation is to take out 75 lots after we feel market did make a move in our direction of lets say in Nifty 40 points. Did I interpret this the way you meant to say it?

If so, why this number and not any other number? Any specific logic or back tested numbers behind your comment or how could I take it as: THE answer for the question asked from the thread starter?

Take care / Dan

 

[galrani]

Keep the stop loss and profit booking rules as part of your system which will define where you place your stop loss and how you will book your profits.

There is no fixed rule which fits all and its dependent on the system you follow, your trading time frame and how much risk you are willing to take per trade.

My system for option longs has initial stop loss at 50% of entry price and 50% profit booking at double entry price further 25% booking at triple the price and then trail the last 25%

This is what suits me as my trades are done on EOD basis and I dont get more than 20 trades a year.

You decide what suits you better, backtest it and paper trade it for some time and if you feel it suits you, then trade live

Cheers

Hi Everyone,
I am new to options trading and have so far lost more money than I have made..one of the reasons I have identified is not booking profits even when there is significant profit, assuming that or hoping it will go up further.
For example I bought nifty 8000 put in the beginning of jan series at around 66..recently after the mega 1 day crash the price of the option had touched 106 .. but I failed to book profit and it is now down to sub 30 levels. I am still holding it though..
So, my question is whether to keep a target or fixed percentage of profit after which I should exit immediately or to wait till the underlying price in this case nifty falls below 8000.
I have lost many profitable trading opportunities because of this dilemma..
Please suggest me the best option (pun intended)

Thank you

 

[trader_ks]

Few consideration can be taken while trading options.
a) Buy/Sell 2 lots at the start of series and based on moving average indicator.
b) Market in favour->Book one lot once you reach 100% profit and let other lot run till opposite cross over happen .
c)market unfavour-> In case when market goes against you and option reach 50% of value , book loss in both option.
d) Whatever happen close all position between 10-15ths of month else time decay will hurt more then momentum gain.

 

[lemondew]

option threads are gaining some speed sounds good

Keep the stop loss and profit booking rules as part of your system which will define where you place your stop loss and how you will book your profits.

There is no fixed rule which fits all and its dependent on the system you follow, your trading time frame and how much risk you are willing to take per trade.

My system for option longs has initial stop loss at 50% of entry price and 50% profit booking at double entry price further 25% booking at triple the price and then trail the last 25%

This is what suits me as my trades are done on EOD basis and I dont get more than 20 trades a year.

You decide what suits you better, backtest it and paper trade it for some time and if you feel it suits you, then trade live

Cheers

 

[sandy81]

Hi Sandy81

May I ask: Does the loss even have any affect on you or you just take it?

It does have an effect on me but not to the extent that I stop trading completely..I have smelt blood in the options market and not going to give up so easily...