The DeCarley Perspective...
Futures Risk Management with Options
Have you ever been stopped out of a trade only to watch the market move in the intended direction without you?
Use Options, Not Stop Orders For Risk Management
Regardless of your strategy, time frame, experience level or account funding—if you have ever traded futures, you have almost certainly experienced the agony of watching a market move without you following an untimely market exit.
Unfortunately, there are no mulligans in trading, but there is a way traders can enter the market with lasting power, defined risk management (even during limit moves), and peace of mind—synthetic calls and puts.Whether you are stopped out, ran out of margin money, or simply can’t take the pain any longer; once you are on the sidelines it is impossible to recover from a poorly-timed speculation. In addition, traders using stop loss orders are exposed to the risk of prices gapping through their stated price, excessive fill slippage, and even limit up or limit down moves.
