This ONE Rule in Options Trading Saved My Profits

0:00Hey Ernest, what's up? One thing we always say on this show is you've got to be intentional with your money. Because it's not just about how much you make, it's about how you manage what you spend. Exactly. That's why tools like Klarna are interesting. It gives you flexibility when you're making purchases. When you're checking out, you can decide how you want to pay, whether that's paying right away or spreading payments over time depending on what works for you. Everything's organized in Klarna app, so you can track your spending in one place. And when you shop through the app, you can find deals and earn cash back with participating partners.

0:38Download the Klarna app today or visit Klarna.com to learn more. California resident loans made or arranged pursuant to a California finance law license. NMLS number 1353190. Klarna balance account required to be eligible for cash back points. Limitations, terms, and conditions above. Financial growth begins long before the first investment. It comes from understanding what you're building toward, what's at stake, and what success looks like for you. At Oppenheimer, we bring bold thinking guided by the full strength of our expertise to put capital to work building and protecting wealth that lasts generations.

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2:24Loan subject to approval in available locations. Wasabi is purpose-built to free your business from skyrocketing storage costs and fees from the big guys. Wasabi is the go-to provider for professional and collegiate sports teams around the world. Check out Wasabi's AI-enabled intelligent media storage, Wasabi Air, and the industry's only cloud storage service with triple protection against cyber criminals. Wasabi, driving innovation in data storage for up to 80 % less than market competition. Try for free at wasabi.com. Wasabi Hot Cloud Storage, proud partner of iHeart Podcast Network. So let's get back to options if we can, because people have questions.

3:02So the first question is, is this time to take profit? If you're up on an option, and, you know, obviously things can move very quickly in that world. So is it time to start taking profit? Lock in profit? I think you lock in profit, you have that story before you even invest. Right, but right now, today. Well, it's individual case, right? Just for general purposes. If people are up on their options, because you're either up or you're down, right? So I'm going to ask the question for people that are down next. But for people that are up, people that are up, right? And they might have already taken some profit.

3:41They might have already done the 100 % strategy. They already did that. They have four contracts. They doubled their money. They already took out two contracts. They have two contracts left. but they're still up, you know, over a hundred percent. Is it time to do another one to lock in profit because of the insert uncertainty in the market? At least, at least you've locked in some level of victory. You can sit on the cash and, and try to figure this thing out until we get some guidance. A couple of things. Number one is how much time do they have inside those contracts? Second thing is you, you lock in your profit before you invest.

4:18Right. And what I mean is like, everybody's not trying to get 100%. Some people might be trying to get 20%. And that's great. Did you get the 20 %? All right, you took out your profit. You may have left the rest of a few contracts in there to appreciate. Well, what's the strategy on the backside, right? Like we're not at 100 % anymore, but now we're pulling down. So what's the threshold now? Is it 50 %? Right, so we don't get back to zero. Right, so you start taking profits when you start to see depreciation. Now, when you go negative, right? So some people are like, wait, I'm down 11%. I'm down 12%.

4:50I'm down 20%. I'm down 30%. Well, that's why we have our stop loss. So before we enter the trade, we have our stop loss, whether that's 30 % or 40%. Some people don't put their stop loss. I am guilty of that. I didn't always put my stop loss because I was putting time on these contracts. Everybody at EYL, I've been huge on Uber. That contract was down 40%, 50%. That contract is out to December of 2028. I'm not thinking about it the same way that I would if I was having a contract that was expiring in April of this year. Right. And so that time factor, all that has already been predetermined. All right.

5:29I'm putting time on it. I'm staying close to or at the money. More recently, I've been buying in the money because of the volatility. So all those strategies are implemented before you even make the trade. And so when you now, when you start to see depreciation, you start to see some pullback. Did I hit my profit margin that I wanted to take money out at? Yes or no? As we go down, what is it? Is it 75 %? Is it 50 %? Is it 20 %? I'm going to get an answer you want, Rashad. Pause. Okay. Okay. If you are undisciplined, yes, it's time to take profit. If you just hit market and got in anywhere because you was told the market is going to go up no matter what, and you have no plan or playbook for how you're trading, yeah, it's time to pack it up.

6:12Take your profit. now you need to reassess completely but we we are troy's talking to a very disciplined and so am i a very disciplined investors but for those of you who just scrounged up some money didn't care you was lighting up at night and just got you like five contracts my brother it's time to be disciplined and this market is going to be tougher than ever until this war is over now it's not play time when it comes to trading yeah and the reason why we started with that as a tip as is buying the time, it's because if this is your first time investing, you're not coming back when you see something like this.

6:47Absolutely. Like if you've invested for the first time in the past two months, it feels so discouraging because like, wait, hold on. This is the first time I'm doing this. I can't recover from this. How do I come back from this? That's why having those thresholds before you ever start, have those thresholds because you might see, we'll use Micron, for example, right? You might see Micron go up to 460. Now let's pull down to 320 today. But somebody sitting in that contract saying, all right, well, I didn't invest yet. This might be a good time for me, right? Or I took some profit. I'm going to, as it's pulling back, I'm going to wait to get back into it.

7:24I might get a call out even further. Like I did that. I'm like, wait, I don't have any in December 28. Let's see if it hits, if it depreciates even more. Like it was 40%. Today, I was on a plane. I didn't get to see it. Those same contracts are probably down 50%. I'm looking to get out into 2028. I'm two years out. All right. Yeah. Is this still the company I believe in? Is the story changed? No. Right? I don't care if SK Hinex becomes publicly traded here in the United States. I understand the story. Even with Google making the announcement about Google Quant and how that might change memory.

7:58Or if you look at the history of Google, a lot of their products are used for internal employees. It's not for the end consumer or most enterprise. It's not enterprise facing, hey, we're making these products so you can buy them. It's, hey, we're using them so we can get ahead and stay ahead. So the story doesn't change. The companies haven't changed. The opportunities and the prices and points that we get them, that will change, but we got to make sure we're on the right side of it. So what's the recommended stop loss? I would say safety is probably anywhere between 20 to 30%. 25%. They've watched me do further.

8:39What companies am I going further on? NVIDIA, right? Will I go 50 %? Of course, I'm going to go 50 % on NVIDIA. Micron, I've done 50 % and they've seen it before where I've gone 50%. If it's a company, I understand a story and I clearly see it. Yeah, I set it a little further out. And this ain't the time for that's two times trading. no stop loss no we're not in that market like chill if it's not an excellent company for my futures traders because some of you are taking your your stops off and you're trying to ride it through the london through american session but things can change so fast make sure that you have your trades in place and for my futures traders record your trades because if you get stopped out you can't tell them hey my stop was at this level and you filled me here you're going to have to send in evidence so that you can verify it and on top of that credit it back to your account because even the slippage in your stop loss may be deeper than you want it to be because of the volatility.

9:37Be mindful. Yeah, it's important and that's why I said nobody celebrates on the negative side. It's like, oh my gosh, the sky's falling. Well, the same micron call that was down 52%, when I posted that it was up 2 ,000%, everybody cheers. Why? It's because it was the discipline. The vision was there. We understood the story. We're there. A lot of people, and shout out to everybody that made gains on that, it's because of the discipline. It's because we bought time for that to have a reversal. We can't predict volatility, but what we can do is buy time to combat it. Hey, Ernest, what's up? One thing we always say on this show is you've got to be intentional with your money.

10:18Because it's not just about how much you make. It's about how you manage what you spend. Exactly. That's why tools like Klana are interesting. It gives you flexibility when you're making purchases. When you're checking out, you can decide how you want to pay, whether that's paying right away or spreading payments over time, depending on what works for you. Everything's organized in Klana app, so you can track your spending in one place. And when you shop through the app, you can find deals and earn cash back with participating partners. Download the Clonar app today or visit clonar.com to learn more.

10:54California resident loans made or arranged pursuant to a California finance law license. NMLS number 1353190. Clonar balance account required to be eligible for cash back points. Limitations, terms, and conditions above. If you're a maintenance supervisor at a manufacturing facility and your machinery isn't working right, Grainger knows you need to understand what's wrong as soon as possible. So when a conveyor motor falters, Grainger offers diagnostic tools like calibration kits and multimeters to help you identify and fix the problem. With Grainger, you can be confident you have everything you need to keep your facility running smoothly.

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