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Do you use stop-loss orders?

Stop-losses are a great way to limit losses with stocks, but options are a different matter.

We don’t use stop-losses often for one reason: Options are incredibly volatile. They can make quick, violent swings based on temporary or even irrelevant news. So an option’s stop-loss can be triggered even if the underlying stock is performing the way we want it to. That means we could be stopped out of a great trade that would eventually bring us profits if we had waited just a little longer.

Mainly, Jeff will only send you a stop-loss recommendation when an event threatens to capsize a seasonal trend just to make sure you are preserving capital.

Naturally, if you wish to set stop-losses on positions to match your trading tolerance level, that is certainly your prerogative. But as a strategy, it is not something we do when we initiate a position. We do, however, set protective stop-losses after a significant gain (+100% at least) to preserve profits so that we don’t give back all of our gains in a downdraft.



I am up $20,070 in closed positions from Feb. 18 through March 7.

- Bob Rowe

I started your system in December … I am ahead $29,000 … I put total faith in you and your system and it has worked for me very nicely. Thanks again I sure like your humble approach about this whole thing

- Dale Leiffer

I have made a little over $4,000 while being cautious.

- Chuck Goss