{"id":1860,"date":"2010-01-12T16:36:01","date_gmt":"2010-01-12T11:06:01","guid":{"rendered":"http:\/\/www.niftylivecharts.com\/blog\/?p=1860"},"modified":"2010-01-12T16:36:30","modified_gmt":"2010-01-12T11:06:30","slug":"putting-stops-on-options","status":"publish","type":"post","link":"https:\/\/www.niftylivecharts.com\/blog\/putting-stops-on-options\/","title":{"rendered":"Putting stops on options"},"content":{"rendered":"<div id=\"_mcePaste\">One thing \u00a0that I think is critical for any option trader whether they are an option seller or a buyer is a stop. \u00a0Just like stock traders everyone who trades options should have a stop that tells them when to get out of a trade.<\/div>\n<div id=\"_mcePaste\">There are a couple different ways you can go about placing a stop on an option. \u00a0The first is placing a stop loss based on the price of the option itself. \u00a0Many traders will feel that this is the best way to go about placing a stop.<\/div>\n<div id=\"_mcePaste\">It helps you to manage the loss that you might inquire while trading. \u00a0Here is an example; if you only want to risk $1000 on a trade you could have a stop on the option to exit if the option loses $1000 or more. \u00a0That can help you to keep your losses short.<\/div>\n<div id=\"_mcePaste\">Also if you are a big risk to reward trader you can more accurately control the amount of risk you are taking with this strategy.<\/div>\n<div id=\"_mcePaste\">The second way to place a stop on an option is through a contingency order. \u00a0This order lets you enter or exit an option based on the price of the stock itself. \u00a0 In other words you can place an order to exit a trade if the stock gets to $50 or lower.<\/div>\n<div id=\"_mcePaste\">If the stock ever gets to $50 or lower you will automatically exit the trade. \u00a0Although this way of trading will make it harder to develop a proper risk to reward ratio it can help you be a little more accurate. \u00a0Because options aren\u2019t 100% priced based off of the price of the stock placing a stop solely on the price of the option can sometimes make you either stay in a trade too long or exit too early.<\/div>\n<div id=\"_mcePaste\">Every option trader must find the way that works best for them. \u00a0One more thing I would like to add. \u00a0Many people will place a mental stop. \u00a0This means that they say they will sell if a stock gets to a certain level. \u00a0This can be devastating because not many have the disciple to actually sell at that point.<\/div>\n<div id=\"_mcePaste\">These people may decide that they will just wait and see. \u00a0Or they will move their stop lower which is a bad thing to do. \u00a0Once you decide your stop you must place the order.<\/div>\n","protected":false},"excerpt":{"rendered":"<p>One thing \u00a0that I think is critical for any option trader whether they are an option seller or a buyer is a stop. \u00a0Just like stock traders everyone who trades options should have a stop that tells them when to get out of a trade. There are a couple different ways you can go about [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[1],"tags":[3097,722,3098,2901,917],"class_list":{"0":"post-1860","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-general","7":"tag-call-option","8":"tag-option-trading","9":"tag-put-option","10":"tag-stock","11":"tag-stocks","12":"entry"},"_links":{"self":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts\/1860","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/comments?post=1860"}],"version-history":[{"count":0,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts\/1860\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/media?parent=1860"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/categories?post=1860"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/tags?post=1860"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}