Trailing Stop
Stop order that follows favorable price moves
What is Trailing Stop?
Trailing Stop A stop order that automatically adjusts as the price moves favorably, maintaining a set distance (in dollars or percentage) from the highest price reached. Useful for protecting profits on long option positions while allowing continued upside participation.
Complete Definition
A stop order that automatically adjusts as the price moves favorably, maintaining a set distance (in dollars or percentage) from the highest price reached. Useful for protecting profits on long option positions while allowing continued upside participation.
Example
You buy a call at $3.00 and set a $1.00 trailing stop. As the call rises to $6.00, your stop moves to $5.00, locking in $2.00 of profit.
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