What is the right way to keep stop loss in Options Trading?


#1

It is really confusing in case of buying option or selling options. When is the right place to keep the stop-loss? Is there any strategy to keep the stop-loss which can give the maximum returns in the stock market.


#2

Like I have already mentioned the difference between the hedged and naked options here.

Those who trade with naked options need to worry about stop-loss. If at all you would like to continue with naked trading especially buying options it is important to keep in mind that you try and exit the options in very short duration. Most likely the stop-loss is kept of the underlying stock. The option price is only derived from the underlying asset so the stop-loss should be also be monitored on the stock.

As far as the hedged strategy is concern one should use Greek Management to manage the entire position.