The core issue here isn’t the trade management decision it’s the framework being used to make it.
Setting a target of 240 and SL of 153 purely on the option premium is a bit like navigating by the shadow instead of the object casting it. Options are derivatives and their price is a function of the underlying’s move, implied volatility, and time decay (theta). When you buy an option, you’re essentially taking a view on one or more of these, not on the premium itself.
So the right questions before entry are:
- What spot level or move you’re betting on? What’s your target/SL on the underlying?
- What’s your IV assumption and are you buying cheap vol or expensive vol?
- How much theta you’re bleeding per day, and does the expected move justify it within the timeframe?
In your example, premium hitting 207 from 174 could mean the underlying moved in your favour, or IV spiked, or both. When it reversed, was it because spot reversed? Or did IV crush after an event? These are completely different situations requiring different responses but you can’t tell if you’re only watching the premium.
On the trail vs. partial booking of profit there’s no universal answer, but it becomes much cleaner when your SL/target is defined on the underlying + vol, not the option price.
This is exactly the kind of scenario analysis- how your position behaves across different spot and vol combinations that most retail traders ignore. I’m actually building something to solve exactly this- Thetix (thetix.trade), built for options traders visualises your Greeks and P&L across spot and vol scenarios before and during a trade, so decisions like yours aren’t gut calls. Worth checking out if you’re serious about this. Thread here