Exiting the trade with a 50% loss would mean selling the call if it drops to $1.50, which is half of the entry price. ![]() If the price were to increase to more than $6, you’d get your original $3 back, plus $3 more, for a 100% return (minus transaction costs). ![]() So that’s their basic plan, at least on paper.Įxiting with a profit of 100% would mean selling the January 80 call for $6. For example, some traders will exit options trades at a 50% loss or a 100% gain. Using percentages instead of dollar amounts allows you to treat your trades equally. You may want to set exits based on a percentage gain or loss of the trade. ![]() There’s no one-size-fits-all trading plan, but at the very least, consider planning your exit points based on a certain profit target or specific loss tolerance.įor example, suppose you bought the XYZ January 80 call for $3. If you make your trading plan in advance, your overall approach is less likely to be influenced by the market occurrences that can, and probably will, affect your thinking after the trade is placed. That’s pre-determine, as in, before you actually make the opening trade. But what does that really mean? Here are a few ideas for creating your own trading plan, along with some order types you can use to implement it.īasically, a trading plan is designed to predetermine your exit strategy for any trade that you initiate. ![]() You probably know you should have a trading plan in place before entering an options trade.
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