Why don’t you use trailing stop orders?

Not all brokers allow you to place a trailing stop. More importantly, a trailing stop is calculated using the highest price of your asset while you’re holding it — meaning the trailing stop follows the movement of the option. If the price rises, so does the trailing stop. Since options can swing widely day-to-day, we could get thrown out of a position before we want to.

A stop-loss order is calculated using your buy price. It’s a fixed point, so we don’t have to worry about it as much if the option begins whipsawing.

The thing with using any stop is that a temporary turn in the share price may stop out your position, only to see profits continue to rise after it. If we use a standard stop-loss order, it’s because Jeff is willing to set the price he wants to sell shares at, while allowing them to fluctuate at any price as long as it remains above our stop-loss.