Lesson

Exit playbook reps | Options Educator

Drill stop, target, and time exits while monitoring greeks drift.

What you'll practice

  • Your risk per share, the gap between the entry and the stop, is one R. Set the first exit price where it earns exactly one R a share.
  • Size and price the first exit so that if the trade turns back right after it, the plan still keeps half an R.
  • Predict: you raise the last exit by one R. What happens to what the plan keeps if the trade turns back after the first exit?

In this lesson

Types of Exits

  • Every trade needs stop, target, and time exit
  • Set exits BEFORE entering the trade
  • Targets should be at least 2x your risk
  • Options need time exits to avoid theta decay

Scaling Out of Winners

  • Scaling out locks in some profit
  • 50/25/25 is a popular scale-out method
  • After first scale, move the stop to breakeven (a gap can still cause a loss)
  • Don't scale on binary events

Trailing Stops for Runners

  • Trailing stops protect profits while letting winners run
  • Multiple trailing methods: %, ATR, MA, swing low
  • Options trails should be more aggressive than stock
  • Never move a stop in the wrong direction

The Exit Playbook in Action

  • Document exit plan before entering
  • Stick to the plan during the trade
  • Have scenarios pre-planned for different outcomes
  • React to new information by updating the plan

Explore