A complete guide on "how to place Stop-loss in options"
🧵
- SL in naked option buying/selling
- SL in Debit spread and credit spread
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@kuttrapali26 @KommawarSwapnil @cprbykgs @bhatiamanu
🧵
- SL in naked option buying/selling
- SL in Debit spread and credit spread
🐦Re-tweet to share the knowledge
🔖Bookmark to save
Tags
@kuttrapali26 @KommawarSwapnil @cprbykgs @bhatiamanu
1⃣ Placing SL in naked option buying/selling
🟢You decide the stop loss to keep on the spot price
🟢Select your strike price and check its delta value (don't go for far OTM contracts)
🟢Assuming you selected ATM strike, its delta is 0.5
🟢Stoploss in option = 50*0.5 =25 points
🟢You decide the stop loss to keep on the spot price
🟢Select your strike price and check its delta value (don't go for far OTM contracts)
🟢Assuming you selected ATM strike, its delta is 0.5
🟢Stoploss in option = 50*0.5 =25 points
2⃣ Placing SL in strategies
🟢Let's assume you created a bear call spread
🟢keep a SL as a % of your max profit
🟢Max profit = 2124
🟢% SL = 20% of max profit = 0.2*2124 = 424
🟢So close trade when MTM reaches this number
🟢Let's assume you created a bear call spread
🟢keep a SL as a % of your max profit
🟢Max profit = 2124
🟢% SL = 20% of max profit = 0.2*2124 = 424
🟢So close trade when MTM reaches this number
3⃣ SL based on closing price in spot
🟢This sound similar to the 1st method, but the SL is not directly placed in the options chart.
🟢Instead you wait for the spot to close below a particular value after which you exit your option trade.
🟢avoid this method for naked trades
🟢This sound similar to the 1st method, but the SL is not directly placed in the options chart.
🟢Instead you wait for the spot to close below a particular value after which you exit your option trade.
🟢avoid this method for naked trades
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