What to Do When Your Profits Arrive Ahead of Schedule

When trading options, even the smallest move in the underlying stock can result in explosive profits.

Just yesterday, we saw exactly this scenario play out with one of my Money Calendar recommendations. Our stock made its move, our options skyrocketed, and we doubled our money in just a single trading day.

Of course, when you’re trading options, those quick moves can work both ways – so you have to grab your profits when you can. If you hang on to a trade for too long, it could roll over, and your winning trade could turn into a loser just as quickly.

Today, I’m going to walk you through that winning Money Calendar case study and show you exactly what happened – and the best way to protect your profits.

Let’s get to it…

Money Calendar is an incredible tool that crunches tons of data points to calculate a stock’s price move from a start date to an end date, along with the average price move it has made over the past 10 years. It also shows you the percentage success rate of those moves.

On September 8, based on its calculations, Money Calendar recommended The Goldman Sachs Group Inc. (NYSE:GS).

Take a look at Money Calendar’s “payout appointment” on GS:

Actions to Take:
Entry Date: September 8, 2015
BUY-to-Open: The Goldman Sachs Group Inc. (NYSE:GS) GS September 18, 2015 $185 Call (GS150918C00185000) at $5.00 or less.

Fills came in at $3.58 shortly after the instructions went out.

Money Calendar showed the average price move happened in seven trading days, and had done so 90% of the time, or nine out of the last 10 years.


As you can see in the stock chart above, GS didn’t need seven trading days this time.  It was more than happy to oblige us the double in just one trading day!

GS gapped up at open, and rather than immediately refilling the gap as a lot of stocks do, it proceeded to show a bit more gumption, and within the first 10 minutes of trading Wednesday, the stock popped to a high of $191.41.

That sent our $185 calls into orbit. Here’s a snapshot of the option pricing:


The price we needed to achieve a 100% return or double on this option trade was $7.16, (entry price of $3.58 doubled = $7.16).

In the quote above, you can see that the spread widened to $6.70 x $7.50, with the mid-price at $7.10. But this is just a snapshot in time and you can see the market makers had a lot of room to play around in the spread to fill orders at a variety of prices.

One of those prices filled just so happened to be the one we needed for this trade. In fact, the high for the first 15 minutes of trading on the $185 call was $8.28!

Now, as Wednesday’s trading wore on, GS stock eventually began trading lower to fill that gap, which means our $185 calls peaked at $8.28 and drifted lower throughout the day, closing at $4.18.

If you weren’t sitting in front of your computer screen during the first 15 minutes of yesterday’s session, you might have missed out on huge profits.

So how do you exit a position like this without having to stare at the screen all day long?

Let me show you…

How to Protect Your Profits

Take a look at the Exit Strategy that was included with Money Calendar’s Goldman Sachs recommendation:

Exit Date: September 16, 2015

Profit Taking Option:

SELL-to-Close: The Goldman Sachs Group Inc. (NYSE:GS) GS September 18, 2015 $185 Call (GS150918C00185000) at a 100% ROI.

Notice that before we even make a trade with Money Calendar, we already have an exit strategy in place. The Exit Date is the absolute last day to exit your positions. And the Profit-Taking Option tells you exactly when to take profits – at 100% gains – eliminating all the guesswork once you’re in a trade.

And here’s the best part – you can set this up with your broker ahead of time.

The best way to do that is with a Limit Order.

Limit Orders allow a trader to enter or exit a position at a predetermined price, and is filled only AT or BETTER than that price, no less. I typically use these types of orders on both entry and exit prices to get exactly the prices I want (limit orders are a great way to cut risk).

Your exit from a given position is just as critical – if not more so – than your entry. With options especially, using a profit target and a limit order can mean the difference between a winning trade and a losing trade.

Here’s your trading lesson summary:

Options can deliver profits quickly, sometimes in as little as a single trading day. But booking those profits can be difficult in today’s fast-moving markets. Here’s what you need to know:

  1. If you hang on to a profitable trade too long, it could roll over and turn into a loser very quickly.
  2. Identify your exit strategy – when to take profits – before you enter a trade.
  3. Place Limit Orders with your broker ahead of time to make sure you get out of a trade with your profits intact.

Good trading,

Tom Gentile

P.S. – Yesterday’s Goldman Sachs trade is just the latest “money doubler” my Money Calendar has delivered for members. Remember, I never recommend a trade unless it has the potential to return 100% gains (or more) in 30 days – and as you can see from today’s case study – those profits can come in just a single trading day.

We’re scheduling more payout appointments this week, including bullish moves in Nike and Priceline. If you’re interested in joining them, membership is open. You can get full details here.

20 Responses to “What to Do When Your Profits Arrive Ahead of Schedule”

  1. Not all trades work out. To avoid a total loss, I want to place a stop loss limit. To ensure I exit a trade at my profit goal I want to place a profit limit. Both at the same time. My Schwab brokerage has not been helpful in providing complete instructions on how to set up a “box trade”. Is this even possible with options?

  2. Suzie (from Australia)

    Tom, you’re an absolute mind reader! I’ve been hesitant to actually trade your recommendations up until now, being uncertain how to clearly exit each trade at the optimal time – and the steps needed to do this. Get this crucial step wrong, and potentially large profits can easily turn into large losses! The clear instructions you’ve just provided answer my questions on this. Thank you SO much !
    My ONLY remaining question is how do you also recommend setting up the 2nd tier order to EXIT on a specific date (if the 100% gains have not been achieved)?

  3. It’s a great way to trade with having exit strategy in place ahead of the time. Your initial entry of $5 or less implies that you could be expecting up to $10 as exit for 100% profit in case you entered at worst possible price at $5. In that case you would still be holding the position and waiting to exit out on Sept 16 but your exit limit order at $7.15 does not translate into 100% profit in case you got worse fill at entering the position. So it is not clear in article above what should be really entered as exit limit order amount.


  4. This is exactly what I needed, and what I just wrote to Tom about on Wednesday. Thanks so much for the crystal clear directions. I have now corrected all my options to sell when the price is doubled. If only I had known this on Tuesday morning, I could have raked in an easy $23K!!! Oh well, another learning experience gained.

  5. Hi Everyone, thank you for the comments… heres a post that hopefully will wrap up all the comments above…

    For those of you who caught that quick punch in GS, congrats… I must admit, its rare when a trade comes on and off in a day, but there have been a few that have happened in less than a week. Its important to know ahead of time your plans. I try my best to alert you to when these things are happening ahead of time, and what to do about it right before the entry date. Still if you want to capture the fast move, you have to think like a chess player, and that means have your limit orders to exit in right after the entries.

    Also think about this for a moment… Though limit orders are great and used most of the time to set yourself up for exit, how can you mark an exit on a specific TIME on an order ahead of time. Well if your broker offers a contingency order to exit a stock or option on a set date or time, thats fantastic. I will be writing up an article on this subject for next week. Oh and for the comment on Schwab, take a look at their offspring company, OptionsXpress. They are better equipped to handle the more complex option positions.

    Finally for the GG comment… its not wrong, your just looking at the PL graph like its a bullish or bearish graph, when its really profits or loss graph based on the bearish trade in green.


  6. Oh one more thing… Étienne.. Heavy Hitter!!! If I might add, I dont know what size account your swinging, and its not really my business, just keep in mind that no matter what basis you trade on, risk management accounts for most long term consistent traders…


  7. YPRAJAPA, sorry I overlooked your comment. We track fill prices from the time the publishing goes out, so remember, limit orders are AT or BETTER than a specified price. At the time the publication went out, the GS trade was significantly less than the limit price. Therefore, the “double” would be less as well…


  8. yes ,sometimes I am late placing a trade…SO PLEASE HELP US -Tell us what your opening price was filled at- then we can set out sell limit properly. This would have saved or made me money and in some cases kept from a loss.!

  9. Tom,
    Thanks for your on field training lessons. I make mistakes to wait best time to exit and forget the volumes, time to expiration date left, I set up my limit exit order recently. I missed best time trade. I learned my lessons I still in profitable stage but I will know how to dicipine myself.

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