Two traders run the same short straddle at the same time every day. One makes money over the year; the other loses. The difference often isn't the entry. It's how they handle stop-losses, re-entries and adjustments.

This guide explains the main stop-loss and adjustment choices for option strategies, how each changes the outcome, and how to test them on historical data with the OPIFY Options Backtester.

Combined stop-loss vs individual leg stop-loss

Neither is always better. It depends on the strategy and the market. That's exactly why you should test both.

Fixed, percentage and trailing stop-losses

• Fixed (₹): exit when the loss reaches a set rupee amount. Easy to plan capital around.
• Percentage: exit when the premium moves a set % against you. Adapts to premium size.
• Trailing: the stop moves in your favour as profit grows, locking in gains.

What to do after a stop-loss or target hits

This is where many strategies are won or lost. On OPIFY you can set an adjustment rule for when a stop-loss or target is hit:

• None: just exit the leg.
• Re-enter Same Leg: enter again, often useful after a whipsaw.
• Shift Strike: move the leg to a new strike (for example, adjusting a strangle).
• Create New Leg: add a hedge or new position.
• Reverse Position: flip the leg.
• Change Lots: increase or reduce size.
• Switch Option Type: switch between call and put.
• Exit All Legs: close the whole strategy.

Adjusting on index moves

You can also trigger an adjustment when the underlying moves a set number of points or % from your entry, up, down or in either direction. For example: "If NIFTY moves 100 points from entry, shift the short strikes to the new ATM."

How to test the difference

1. Build your strategy in the Options Backtester.
2. Run it with no stop-loss as a baseline.
3. Run it with a combined stop-loss.
4. Run it with an individual leg stop-loss.
5. Add a re-entry or shift-strike rule and run again.
6. Compare net P&L, max drawdown, worst trade and losing streak across all versions.

Don't over-tune

It's tempting to test 50 stop-loss values and pick the one with the best result. That number is usually fitted to past noise and rarely works as well live. Prefer round, sensible values that perform reasonably across different periods. Use Performance Comparison to check two timeframes.

Frequently asked questions

Should I always use a stop-loss?

For most strategies, especially those selling options, yes. Backtest with and without one to see the difference in worst-case losses.

Can re-entries make things worse?

Yes. On strongly trending days, re-entering a losing side can multiply losses. Always check the worst trades in the log.

This article is for education only and is not investment advice. Past performance does not guarantee future results.