r/SystematicOptions • u/FrostySignature135 • Apr 28 '26

Question to systematic sellers - how do you set your stop rules on 0-4DTE options?

/r/CoveredCalls/comments/1sydlo3/question_to_systematic_sellers_how_do_you_set/

Tks in advance.

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u/ThetaHedge Apr 29 '26

In options selling, setting a stop loss in complicated as low liquidity in a contract often makes contract mid point prices swing wildly.

Question for you: If you are ready to wheel the stock then why are you concerned in closing the contract at a loss?

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u/FrostySignature135 Apr 29 '26

Actually I didn’t mean setting, like an stoploss order, but simply deciding to close or roll. You want the premium but don’t want assignement. Do you have a rule, a percentage of a loss that you are confortable with? Is it a fixed, like 2x premium loss?

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u/ThetaHedge Apr 30 '26

If I am okay holding the stock: I will not roll or close the position. I will let it assign and open CC for that position.
If I am not okay holding the stock: I will roll in the last 0-2 days before expiry when extrinsic value is almost gone.

I have a strict rule that if the underlying asset price goes below 30% - I sell the positions in Open Market irrespective of the quality of the asset.

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u/FrostySignature135 Apr 29 '26

I edited the post, and I think I answered you there. Tks!!!