GTC Order to close position

[Antoxa]

What I'm trying to understand is the best strategy to close winners. At the moment I set up GTC order to catch 15% gain for a long straddle and 25% for the calendar. This works pretty well when IV strikes while I'm not around my computer. However this also limits my profits. What if IV spikes higher then my profit target? What if underlying stock moves dramatically producing 100+% for a straddle while I'm taking just 15%?

 

What is your workaround here?

 

[Maji]

I think trading is about probabilities... if you go through the closed trades, then I think the average straddle/hedged straddle have produced a 10-12% gain on the average. So, a 15% gain is above average and I will be happy to take it. The SO system is based on making small but consistent profits and not home runs. I usually put a GTC of 10% for straddles and 30-40% on calendars, depending on where I entered. Sometimes, I will lower it to 25%, if the trade does not seem to be moving.

You can set alerts if your broker/quote system allows that. Other than that, imo, GTC is the way to go if you can't monitor your positions.

Good luck.

[CPO]

9 hours ago, Antoxa said:

What I'm trying to understand is the best strategy to close winners. At the moment I set up GTC order to catch 15% gain for a long straddle and 25% for the calendar. This works pretty well when IV strikes while I'm not around my computer. However this also limits my profits. What if IV spikes higher then my profit target? What if underlying stock moves dramatically producing 100+% for a straddle while I'm taking just 15%?

 

What is your workaround here?

 

The million dollar question.  I usually set a GTC for 10%.  As we get closer to earnings i'll adjust down the target.  This is obviously sub-optimal especially when some stocks get an IV spike in last couple of hours of trading prior to earnings.  Another option is to add a trailing stop to the order but you can easily get stopped out too early.

As Maji said, trading is about having an edge and then working the probabilities. You can't max the gain on every trade.

[Antoxa]

Thank you for reply guys! Much appreciated.

 

One more question: how do you set up GTC orders for hedged straddles? Is it one order for both Straddle and Strangle?

[Maji]

On 1/16/2018 at 10:32 AM, Antoxa said:

Thank you for reply guys! Much appreciated.

 

One more question: how do you set up GTC orders for hedged straddles? Is it one order for both Straddle and Strangle?

I set up the profit target of the hedged position in its entirety. However, sometimes I have to split them if they are not filled even when the mid is beyond it and it is sitting there.

[IgorK]

On 2018-01-16 at 1:32 PM, Antoxa said:

Thank you for reply guys! Much appreciated.

 

One more question: how do you set up GTC orders for hedged straddles? Is it one order for both Straddle and Strangle?

 

2 hours ago, Maji said:

I set up the profit target of the hedged position in its entirety. However, sometimes I have to split them if they are not filled even when the mid is beyond it and it is sitting there.

It all depends on how many strangle iterations we get and also how stock behaves.

I recently started to do is the following: I setup OCA orders to buy back for short strangle put and call for around 0.04-0.05 and also setup OCA order for entire combo. Like 3 straddles and one strangle.

So there are 3 orders. And if one of the orders executed other will be canceled and I will reevaluate the result.

My 2c...

 

Edited January 20, 2018 by IgorK