When to Take Profit on Options: 50% vs 80% Targets

By Stephen Manning · @StephenCFU on X · 2025-06-09 · 8 min read

When to take profit on options: how 50% and 80% profit targets work on credit spreads and iron condors, setting GTC orders, and time-based exits.

A profit target is a rule to close a trade once it has captured a set share of its maximum profit, commonly 50% or 80% of the credit on a credit spread. Closing early gives up the last part of the premium but takes you out of expiration week, when a late move can do the most damage.

This guide runs both targets on the same trade, shows how to set one with a GTC order, and explains when the calendar should close a trade before the target does.

What is a profit target in options?

Once a trade has made a set share of its maximum profit, you close it. For option sellers (credit spreads, iron condors, short puts), the maximum profit is the credit you collected, so the target is a buy-back price: you buy the spread or short option back once most of the credit has decayed. For option buyers the maximum is unlimited on a long call and only reached on a long put if the stock goes to zero, so the target is a dollar or percentage gain you set at entry.

Example: You sell a credit spread for $200. With an 80% target, you close it if you can buy it back for $40, keeping $160, even with several days left before expiration. With a 50% target, you buy it back at $100 and keep $100.

Why close before expiration?

As expiration gets closer, the profit left in a short option shrinks while the risk of a sharp move against you does not. That is the case for closing early:

• Risk/reward shift: The last part of the premium comes with a disproportionately higher risk of a reversal or, for a short option that finishes in the money, assignment.
• Gamma: Gamma, the rate at which delta changes, is highest for near-the-money options in the final days, so a small move in the stock can swing a winning spread into a loser quickly.
• Capital recycling: Closing early frees buying power for the next trade instead of tying it up for the final few dollars.
• Less pressure: A trade you have already closed cannot surprise you on expiration Friday, and you are not glued to the screen in the last few days.

50% vs 80%: which target fits which trade

Take one hypothetical trade and run both targets. You sell a SPY 400/395 put credit spread for a $2.00 credit. The spread is $5 wide, so the most you can lose is $3.00 a share ($300 per contract), the most you can make is the $200 credit, and your breakeven at expiration is $398.

The bottom row is the real decision. Every day you hold a winning credit spread, the reward left gets smaller while the risk left stays close to the full width of the spread. A useful test at any point: would you open this trade today, risking $460 to make $40? If the answer is no, the target has done its job.

The 50% target gets you out sooner with a smaller win, and the trade spends less time exposed to a reversal. It suits trades opened several weeks out, because it can fill well before expiration week. It is the target our put credit spread playbook uses.

The 80% target keeps more of each winner, but the last stretch of profit usually comes late, so you stay in longer and closer to the riskiest days. It fits when a trade gets there fast, for example after a sharp move in your favor or a drop in implied volatility, with plenty of time still on the clock. If a trade only reaches 80% in its last few days, you held through the most dangerous stretch to earn it.

Whichever number you choose, set it before entry and use it on every trade of that type.

How to set it: GTC orders and alerts

1. Find the maximum profit. On a credit trade it is the credit you collected, for example $2.50 a share ($250 per contract) on a spread. On a long option, set a dollar target that fits the setup.
2. Work out the buy-back price. On that $2.50 credit, a 50% target means buying the spread back at $1.25. An 80% target means buying it back at $0.50, keeping $200 of the $250.
3. Place a GTC order right after entry. Most brokers let you enter a Good 'Til Canceled limit order to buy the spread back at your target price. Placed as soon as the opening order fills, it closes the trade without you watching.
4. Set an alert short of the target. A price or P/L % alert a little before the target (say 70% on an 80% target) tells you a trade is close, so a fill is never a surprise.
5. Log the exit. Record each closed trade and why it closed: profit target, time stop or loss exit. Over time the log tells you whether your target suits your trades.

On an iron condor the target covers all four legs. Sell a $10-wide condor for $1.10 ($110), and an 80% target is a GTC order to buy the whole condor back at $0.22, keeping $88. A 50% target buys it back at $0.55, keeping $55. The maximum loss on that condor is $8.90 a share ($890), the width minus the credit, because only one side can finish in the money.

Time-based exits: what our record shows

A profit target can sit unfilled while the clock runs down. A time-based exit, or time stop, closes the trade at a set point on the calendar whether or not the target has filled. A common version is to close any profitable spread with 21 days left, which fits trades opened about 45 days out. Ours run shorter, so we set the clock from what the record shows:

• Put credit spreads: across 347 closed put credit spreads, we opened them a median of 26 days from expiry and held them a median of 17 days. The typical spread was closed with a week or so still on the clock, and a quarter closed inside the first seven days.
• Covered calls: sold around 14 days from expiry and held about 13. They run almost to the end.

That difference comes from the trade, not inconsistency. On a spread, once most of the credit is in, the reward left is small and the risk of a late move is at its largest, so the final week is mostly risk. That is why the time stop in our put credit spread playbook is 7 to 10 days left: the spread closes at the 50% target or at that point, whichever comes first. On a covered call you own the shares, and the call is how you get paid to wait. Letting it run captures more of the premium, and if the shares get called away at the strike, that was part of the plan.

Using one exit rule for every structure means it will be the wrong rule for some of them. For the full breakdown by structure, see what our audited record shows about closing early.

Profit-taking mistakes

• Moving the target: "It's up 40%, maybe I'll wait for 60%." Raising the target mid-trade means holding into the stretch the target was set to avoid, and it often ends with giving gains back.
• Emotional exits: Closing a sound trade during a normal pullback, when none of your exit rules has triggered, swaps your plan for a reaction to the last few candles.
• Partial exits without rules: Taking "half off" at the target without deciding what closes the rest leaves you holding an unplanned position.
• Ignoring the calendar: An earnings date or a major economic report inside the trade's remaining life changes its risk. A target set at entry doesn't know about it, so check the calendar before you let a trade run past one.
• Planning only the win: A profit target is half an exit plan. Decide your loss exit before entry too, and know what you will do when a spread is threatened. If you consider rolling a losing credit spread, our rule is one roll and done, or none: if a rolled trade is threatened again, close it.

For the errors that hurt new traders before the exit even comes into it, see what beginners get wrong about trading options.

Pitfalls to plan for

• Opportunity cost: You will sometimes leave the last of the premium on trades that would have expired worthless. That is the price of not holding every trade through expiration week.
• Fees and fills: Closing early means more orders, so include commissions in your numbers. A GTC limit only fills if the market trades at your price, and on wide, illiquid spreads it can sit unfilled.
• A target is not a strategy: It doesn't replace trade selection or position sizing. Keep the maximum loss on any one trade to 1 to 2% of your account (see how much to risk per trade), and start with defined-risk trades such as credit spreads and iron condors, where the loss is capped.
• Volatile markets: When markets are unusually volatile, consider a lower target (70 to 75% instead of 80%) to cut exposure further.
• Automation: Not every platform handles multi-leg exit orders smoothly. Paper trade first to see how your broker treats a GTC order on a spread before you rely on it.

At Cash Flow University, every alert is posted in real time with the risk, target and stop stated, and every closed trade goes into an audited record, so members can see how these exits play out across more than 1,200 closed trades since April 2023, losers included.

Filed under: Risk Management, Credit Spreads

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