You Don’t Need Stops when Trading Weekly Options with these Strategies!

Listen to Our Podcast In Your Favorite Platform

Greetings, fellow traders! Today, I want to challenge a conventional wisdom in trading – the concept of always having a stop. Now, before you think I’ve gone off the deep end, especially if you’re an options trader, hear me out. There are specific conditions and strategies where implementing a stop might not be as crucial as you’ve been led to believe. Let’s explore this idea together and dive into the nuanced world of stop management.

Rethinking Stops for Options Trading

In the trading world, there’s a pervasive belief that stops are an absolute necessity. People emphasize the importance of setting stops to mitigate risks and prevent catastrophic losses. While this holds true for certain types of trading, particularly when buying stocks or shares, the dynamics shift when you’re trading options.

Risk Management through Options Strategies

Options trading revolves around risk management and risk-to-reward ratios. Let’s consider an example using Zillow. If I’m bullish on Zillow and decide to enter a vertical spread, my risk is predefined by the width of the spread. If I choose a $1-wide spread and risk $51 to potentially make $49, I’ve established a risk-to-reward ratio of 1:1. In such a scenario, where my risk is already defined, do I really need a stop? Not necessarily.

Efficiency and Practicality

The efficiency and practicality of implementing stops become evident when managing multiple trades or when you have a busy schedule. Manually setting, monitoring, and executing stops for each trade can be time-consuming and mentally taxing. This becomes even more challenging as the number of trades increases.

Options Strategies with Predefined Risk

In options trading, strategies like vertical spreads, iron condors, and butterflies offer predefined risk. For instance, if I’m risking $92 to make $8 in a vertical spread, I’ve already set my risk. If the trade goes against me, I won’t lose more than the predefined amount. In such cases, the need for a specific stop is diminished.

Tailoring Stops to Risk Tolerance

When implementing stops, it’s essential to consider your risk tolerance and the specific strategy you’re employing. If the risk-to-reward ratio aligns with your comfort level and the trade’s dynamics, a predefined risk may negate the necessity of a stop.

Strategic Adjustments for Smaller Stops

To refine risk further, consider adjusting the strike prices in your options strategy. By strategically selecting different strike prices, you can achieve a smaller predefined risk. For example, choosing a $40 risk in a vertical spread allows you to set a stop at $35, minimizing potential losses.

Exceptions: When Stops Are Crucial

While options trading offers flexibility in stop management, there are exceptions. In scenarios where the risk-to-reward ratio isn’t favorable, such as buying single options or engaging in riskier trades, implementing stops becomes crucial. In these cases, stops act as a safeguard against significant losses.

Conclusion: Mastering Stop Management in Options Trading:

In conclusion, the idea that you always need a stop in trading requires a nuanced perspective, especially in options trading. Understanding the dynamics of your chosen strategy, risk-to-reward ratios, and the predefined nature of certain options strategies allows you to navigate the markets more efficiently. Remember, there are situations where stops are essential, but mastering stop management involves discernment and strategic thinking.

Explore our website, tradersfly.com, for valuable resources, freebies, coaching sessions, and comprehensive courses to elevate your trading knowledge. Keep learning, stay informed, and I look forward to sharing more insights with you in the next video. Happy trading!

Want to work with me for 3+ months and learn how to trade options like a pro?

Struggling to consistently trade options profitability? Learn how to increase your success rate with your iron condor option trading in our new Options Mastery: Iron Condor course

How to Trade

Covered Calls

Learn how to make Weekly and Monthly Income by Trading Covered Calls, with our new mini-course.

FREE MINI COURSE!

HOW TO SELL

OPTION PUTS

Maximize your profits by mastering the art of selling option puts with our free mini course.

FREE MINI COURSE!

SELLING

COVERED CALLS

Make consistent monthly income trading

options on stocks you own

NEW BOOK

60891

FOR BEGINNERS

Ready to Learn Profitable

Strategies to Trade Stocks?

If you are serious to learn how to trade stocks more profitably, make more money, and trade with confidence...

Then sign up to get our free educational videos!

FREE NEWSLETTER

5 DIFFERENT IRON

CONDOR SETUPS

In this free video, I'll show you 5 powerful iron condor setups & strategies you can use.

FREE VIDEO

3 POWERFUL OPTION

VERTICAL STRATEGIES

Discover 3 super powerful vertical

strategies & how to set them up.

FREE VIDEO

HOW TO SELL

OPTION PUTS

Maximize your profits by mastering the art of selling option puts with our free mini course.

FREE MINI COURSE!

NEW TO OPTIONS TRADING?

Unlock the World of Trading Options in just 4 Weeks, with our FREE Options Trading

for Beginners Mini Course!

FREE MINI COURSE

BUYING OR BUILDING A

TRADING COMPUTER

In this FREE video series we cover exactly what kind of trading computer or workstation you should buy or build. From the number of monitors to the processor and more.

FREE MINI COURSE

HOW TO FIND

HOT STOCKS!

Get the free checklist to help you find

the best stocks to trade, quick & easy.

FREE CHECKLIST

60440

Get Access to All Secret Files & Libraries for FREE!

To get access to all of my freebies, enter your email below & I will send you a list of all my freebies.

ALL FREEBIES

60459

Get Access to All Secret Files & Libraries for FREE!

To get access to all of my freebies, enter your email below & I will send you a list of all my freebies.

ALL FREEBIES

60459

NEW TO OPTIONS TRADING?

Unlock the World of Trading Options in just 5 Days, with our FREE Options Trading

for Beginners Mini Course!

FREE MINI COURSE

OPTION STRATEGIES

Enter your email address below and get access to our video strategy session on 25+ option strategies and how to set them up.

25

BUYING OR BUILDING A

TRADING COMPUTER

In this FREE video series we cover exactly what kind of trading computer or workstation you should buy or build. From the number of monitors to the processor and more.

FREE MINI COURSE

HOW TO SELL

OPTION PUTS

Maximize your profits by mastering the art of selling option puts with our free mini course.

FREE MINI COURSE!

How to Trade

Covered Calls

Learn how to make Weekly and Monthly Income by Trading Covered Calls, with our new mini-course.

FREE MINI COURSE!

OPTION TRADING GEEKS CHEATSHEET

Download my options greeks worksheet and I will also send you 6+ other freebies as well!

Enter your email below to get the secret link!

Reaching $1,000,000
in The Stock Market!

Want to see for yourself how long it will take you to reach $1,000,000 based on your personal return? Then download my Excel cheatsheet for FREE to see and play with the numbers.

FREE SPREADSHEET

Top 15 Dividend Stocks for Retirement in 2023

Download our list of the best stocks for retirement. Simply enter your email address below to get the PDF.

3 POWERFUL OPTION

VERTICAL STRATEGIES

Discover 3 super powerful vertical

strategies & how to set them up.

FREE VIDEO

HOW TO FIND

HOT STOCKS!

Get the free checklist to help you find

the best stocks to trade, quick & easy.

FREE CHECKLIST

60440

THINKORSWIM

OPTIONS PLATFORM

Learn to see how I personally use the ThinkorSwim platform to trading options and what are some of the tips and tricks to using this platform efficiently.

VIDEO TRAINING

5 DIFFERENT IRON

CONDOR SETUPS

In this free video, I'll show you 5 powerful iron condor setups & strategies you can use.

FREE VIDEO

FREE 20 MIN CALL WITH SASHA

Want to work with Sasha for 3+ months & learn how to trade options the right way?

DISCOVERY CALL!

To get started, enter your email address and we will send you details on how to book your session!!