167: Options Trading Profit Targets - When Should You Break The Rules?

The Option Alpha Podcast

Kirk Du Plessis

Investing, Trading, Stock Market, Business, Options Trading, Education, Finance

4.8 • 1.2K Ratings

🗓️ 24 October 2019

⏱️ 22 minutes

🔗️ Recording | iTunes | RSS

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Summary

Show notes: http://optionalpha.com/show167

Oh, profit targets. The double edge sword of confusion for many traders. Take profits too early and you feel like you left money on the table. Too late and you kick yourself because the trade could have moved against you. And because we've been getting so many questions on when and why we've let positions go beyond traditional profit targets, we wanted to record today's show to talk about the top 3 market setups that would lead us to break profit-taking rules. Yes, you heard me right, and longtime members have known this for years, but we don't always take profits at 25% and 50%. Shocking? Shouldn't be because our Profit Matrix research 2 years ago laid the foundation for holding positions generally longer towards expiration.

Transcript

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0:00.0	You're listening to the Option Alpha Podcast from Option Alpha.com where we show you how to make
0:06.3	smarter trades learn how the stock market really works and generate consistent monthly
0:11.2	income. Now your host and head trader at
0:15.0	option alpha.com Kirk depluses.
0:20.0	Hey everyone this is Kirk here again from option alpha. com working every single week to make this the most popular investing
0:25.4	podcast offered online because it's based on one thing and one thing only and
0:29.4	that's helping you guys make smarter trades so thank you so much for
0:32.3	tuning in today on today's show. We are going to go through the three market setups that would lead me to breaking our traditional profit target rules. Now truth be told this topic is one that I've had kind of scheduled out and
0:44.0	sketched out now for quite a while and I wanted to get to this and I'm glad that we're
0:47.8	actually getting around to doing this on the weekly podcast because we get a lot of
0:51.3	questions about this. This seems to be like a real sticking point for a lot of people when it comes to trading.
0:56.5	It seems to be a real challenge for a lot of new traders. They don't know exactly what to do when you get to a profit target level because they may have seen me or other people start to break
1:06.8	profit target rules and go beyond a profit target. And so today I wanted to kind of lay out what I think are the three potential market setups that would lead me to not take the position off at a predetermined profit target.
1:19.8	Now again, you can always check out the show notes page, Option Alpha.com, one 67.
1:24.6	Again, that's just the number 167.
1:26.7	Option Alpha.com slash show 167.
1:28.7	We'll have all these kind of highlighted and summarized for you.
1:31.3	And we'll try to throw in some links in there as well to some of the video updates where in some cases we do take profits after we get beyond our traditional profit-taking level.
1:39.0	Now, before I go through what these three things are, I think it's actually really important just to take a quick step back and talk
1:46.1	about our general profit target levels. Now of course what we have always said and
1:50.4	what we remain saying is that we generally think that there's a
1:53.7	range where you can take potential positions off early before expiration and in doing
	...

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