--- title: "How do people set a stop loss on options, and when do they" description: "A stop loss on an option is an order that goes live once the price you set trades, so it is not a fixed cap on the loss." source_url: "https://www.rupeecase.com/learn/questions/stop-loss-on-options" --- Traded volume jumps from strike to strike, even next to the money Contracts traded on 10 Jun 2026 at strikes around the at the money strike, calls and puts together, for the 30 Jun 2026 expiry. A stop order at a thinly traded strike can fill well away from its trigger. Source: NSE end of day data, computed by RupeeCase. As of 10 Jun 2026. On 10 Jun 2026 the 30 Jun Nifty chain traded very unevenly from strike to strike. The chart shows contracts traded at strikes next to each other. A round strike can trade tens of thousands of contracts while the strike next to it trades a few thousand or fewer. A stop loss is an order that goes live once the price you set is traded. It is not a fixed limit on the loss. As a market order it fills at the next available price, which on a busy strike is usually close to the trigger. On a thin strike the next traded price can be well away from it, and the loss can be larger than the figure you had in mind. As a limit order it can fail to fill at all when the price jumps past the limit. For a buyer, the premium is already the most that can be lost, so a stop only exits earlier. For a seller, the loss can keep growing past any level set in advance, and a stop on a sold option can fill after a gap, well past its trigger. The cap is the premium for a buyer and nothing for a seller, so the two cases differ. People tie a stop to the option's own price, to a level on the index, or to a time limit. Which one, and how large the position is against the capital, is a risk decision made before the trade. This page does not give a level or a rule for when to exit. The modules on position size and on the option chain cover the rest. **Before you trade.** Derivatives trading carries a high risk of loss. SEBI's study "Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26)" (August 2026) found that 87.7% of individual traders in equity F&O made net losses in FY26, with aggregate net losses of Rs 91,685 crore. [Read the SEBI study](https://www.sebi.gov.in/reports-and-statistics/research/aug-2026/study-profitability-of-individual-traders-in-the-equity-derivatives-segment-fy25-fy26-_103835.html) How do people set a stop loss on options, and when do they exit?A stop loss on an option is an order that goes live once the price you set trades, so it is not a fixed cap on the loss. At a thinly traded strike the next traded price can sit well away from the trigger. Partly true. For a buyer the premium already caps the loss, so a stop only exits sooner. For a seller a stop gives no firm limit, because the fill can come after a gap. LGo deeper ## Where Learn teaches this. [Go deeperPosition sizing and risk of ruin for F&O beginners8 min, Beginner](/learn/path-12/module-12-7-position-sizing-and-risk-of-ruin)[Go deeperLiquidity in the chain: spreads, volume and tradable strikes9 min, Intermediate](/learn/path-15/module-15-5-option-chain-liquidity) SSources ## Go to the source. 2 sources, NSE the most cited The publisher of each source listed below. Source: Module undefined source list. 1. [SEBI investor education, Understanding derivatives](https://investor.sebi.gov.in/understanding_derivatives.html) SEBI 2. [NSE option chain page (the school reads dated end of day chains, not the live screen)](https://www.nseindia.com/option-chain) NSE ?Questions people ask ## Related questions. [QuestionWhy do 9 out of 10 F&O traders lose money?Beginner](/learn/questions/why-fo-traders-lose)[QuestionHow much capital do I need to trade or sell options?Beginner, trap check](/learn/questions/capital-needed-for-options)[QuestionCan an option buyer lose more than the premium, and can I hold options to expiry?Beginner](/learn/questions/can-option-buyer-lose-more)[QuestionWhat are open interest, change in OI and cumulative OI?Beginner](/learn/questions/what-is-open-interest) [All 130 questions](/learn/questions/) Explore next ## Go deeper on this question. * [QuestionWhat are SEBI's F&O rules on lot size, weekly expiry and upfront premium?A short answer with a dated chart](/learn/questions/sebi-fo-rules) * [ToolOption payoff builderLegs on a dated Nifty chain, breakevens and charges](/learn/tools/payoff-builder) * [GlossaryInvesting glossary, 230 termsPlain word definitions, and the app’s own](/learn/glossary) Community ## Join my WhatsApp group. 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