The premium is the stop

I generally don't use stop losses on long option positions.

The premium is the stop. That's most of the reason I'm using an option in the first place instead of futures with a stop underneath.

Compare the two structures side by side.

With futures, you're relying on a level holding. The market's daily noise can knock you out of a position you still believe in, and then the market does exactly what you thought it was going to do without you in it.

The option doesn't do that.

I've decided what I'm willing to lose the moment I pay the premium. That's the risk, capped and known. What I've bought in exchange is time for the view to work.

There is an exception.

When the view itself changes, I get out. If something comes along that genuinely invalidates the reason I put the trade on, I'll sell whatever premium's left and put the money somewhere I actually have a view.

Notice this has nothing to do with the market taking me out. I've just changed my mind about the trade.

Worth flagging one caveat.

That "sell whatever premium's left" exit is much easier on longer-dated positions. Short dated and there's often nothing meaningful left to sell by the time your mind changes.

Which is the actual point I want to leave you with.

Two things get me out of a long option trade. The premium runs out on its own. Or the reason for the trade goes away. That's it. The market moving against me isn't on the list.

How I actually manage a long option position from entry to exit is part of my framework.

This framework is ripped apart, free for 60 minutes, linked below.

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