When to Close an Option Trade: I Like Using Percent to Double

I’ve authored educational articles recently on what I call Option Trade Management. I have often written about managing your option trade and when to consider closing your option trade based on when to take a loss and preserve capital.

This week I’m going to write about trade management from the perspective of when to close your option trade based on profit.

Taking Profits on Option Trades

Many of my students/subscribers tell me thy have a harder time knowing when to close their options trades for profits.

The two primary concerns: 1) Taking a profit too soon and 2) Hanging on to a trade too long and giving back unrealized profits.

For #1, the dilemma they say is they fear taking a profit too soon. They say it really stinks when they take a profit, only to see the security keep going in the direction they anticipated, and the option could have made even more money than they took.

In other words, they hate it when they leave money on the table.

They also admit it hurts when they see a profit opportunity that looks decent, but they hang on to the option hoping it can make even more of a profit; #2. When they do that, they say that is the point when the stock works in the opposite direction needed and they end up giving back some of those profits they could have had.

You know what? I can’t disagree with any of them as I have been there myself and that is something options traders will tell you never really goes away. There just may not be a perfect time to take profits.

Set a Dollar Gain or Percentage Gain for your Option Trade Plan

Once you come to the realization there really isn’t a perfect time to take profits that will take the pressure off you when executing your options trades.

You should set a profit goal and have that as part of your trade plan before you place a dime on an options trade – at least that is my view.

You can make the time to sell your option contingent on the security hitting a certain price. In those cases, your option trade management is based on your technical analysis on the underlying security.

You can say if I make x amount of dollars on the trade that is where I will close the trade.

You can say if my option trade gets a gain of x percent that is where I will close the trade.

If you have a dollar stop loss or percentage stop loss then you can assess whether your reward to risk ratio is where you like.

Percent to Double

When I trade options I really like to go after a double or a 100% return as often as possible.

This means if I open an option trade at a cost of $4.00 or $400 per contract, I want to see that option go to a value of $8.00 or $800. This would be a 100% ROI.

It is at that time I like to sell half my positions for that double then hang on to the last half for another double (200% ROI) or as much towards another double as possible. Often the closing of the option decision happens as I get closer to the option expiration as I am potentially giving back profit or profit is slowing down because of that decay (time value is decreasing the closer to expiration the trade gets).

Calculating Percent to Double

Its easy to say, if I buy to open for X then a 100% or double that is 2 times x.

The concern is we don’t always know how much of a percentage move of the underlying security is needed for the value of the option to double.

That’s where my option tools comes in (www.tomsopiontools.com)

In many of my scans I can get the Percent to Double calculation. I am not sure there are many software programs for options analysis that offers this.

I searched on the internet if there are brokers that offer a percent to double calculations for their options features. The internet AI searches will tell you “Percent to Double” is a metric used by some brokerage firms to help options traders understand how much a stock needs to move for an option to double in value.

But thy can’t produce a list of specific brokerages that offer it at their firm / on their options trading platforms.

What I am looking for that my tools provide is this: EXAMPLE

I bring up my options data tables and I am searching on 3M Company (NYS: MMM). I search up options for the May 16 expiration dates and click Update.

I then start exploring by selecting an option strike, generally looking slightly in the money or an option with a 70 – 75 Delta. I also search just slightly out of the money options, somewhere in the35 delta range.

No matter which one I bring up for further analysis I can get to a data table that shows me a Percent to Double table.

Not only do I like to see the percent to double at various prices of the underlying security, but I also get to see what the price the security needs to be at for the option value to double at different time intervals to expiration.

Take a look at the Option Cost and other data for the MMM May 16, 2025, $136 Call:

I can then scroll down my page to the Statistics and Probability data table for the option.

I can go through the various strike price options and look for the one with the lowest percent to double.

Search for the Lowest Percent to Double

I do not like to have my security have to work that hard for me to realize my profit. I like to find an option that has a low or the lowest percent to double. That way I don’t have to have my underlying security have to move any further than it has to in order to get a double.

In other words, I would like to get my double as quickly as possible.

I have scans that will search up a technical pattern and also produce the option trade with the lowest percent to double out of its option chain.

Setting Your Profit Goal on your Option Trades Wrap Up

There are many ways to set your profit goal. Discuss with your broker to gain their insights if they have any.

One can choose a dollar amount gain or a percentage return gain.

It’s easy to say if I spent $2 I want to sell for $4 and that means a double or a 100% return, but if you want to be more specific in figuring what that price of the underlying security needs to be in order to GET that double in value see if your broker has the percent to double calculation capability. 

Otherwise, you have to research any options analysis software out there on the market and see if theirs does —- mine does!

Patterns and Profits

I teach options education, I run multiple videos each week, where I give my overall market view, my sector specific insights and discuss potential stocks and ETF’s and crypto currencies.

I then break down for everyone where I see the security (stock , ETF or crypto) going in price and by when. Those are two very key pieces of info I assess in my options trading that help with my success.

I then educate people on my options analysis and process of deciding what options strategies are available and which one I would consider doing.

I do not offer the options as a recommendation, but as a means to educate you on the power and leverage of options and how you might consider taking on more of my education and alert services to improve your knowledge on how to trade options successfully!

if you want to learn from me my options trading process you can gain insights at my site Patterns and Profits.

Welcome to Patterns & Profits with Tom Gentile – Gulfport Analytics

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