The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone, Kirk here again at Option Alpha and welcome back to the daily call. On today’s daily call, I want to answer the question quickly – “How exactly do you calculate profit targets?” I think although it seems intuitive for most of us, it might actually be something that you just want to double check as you’re going through your trades and just make sure that you understand how exactly you calculate these profit targets. Now, why do we talk about profit targets? Well, we understand that the concept of taking trades off early really helps us out in our long-term returns and win rates. It helps us out in reducing drawdowns, just this idea of managing positions or removing positions earlier in the expiration cycle. Now, I would say that each profit target level may depend on the exact time that you enter the trade, the strategy, where implied volatility is, all this stuff. There’s no one size fits all, meaning that there’s not always going to be say a 25% profit target for everything. It really depends o