Options Position Sizing Calculator

Enter your total account size, the max percentage you'll risk on one position (I use 5%), and the strike price of the put you're looking at. The calculator shows your max contract count, total capital committed, and expected premium income at that size.

The Kelly Criterion section shows the mathematically optimal size based on your win rate and average win/loss ratio. For most wheel traders, full Kelly suggests more than you should actually risk. Use half-Kelly or quarter-Kelly. Trust me on this.

Play with the risk percentage slider. The goal is simple: find the highest contract count where a worst-case scenario on that single position only causes a manageable drawdown. Not a portfolio-ending one.

I check this before every single trade. No exceptions.

• Before selling any new contract: Takes 10 seconds. Prevents the #1 mistake in options selling — oversizing. I lost 80% in one day early on because too much capital was in one position. Never again.
• After your account size changes: Big win? Bad assignment? Added capital? Recalculate. Your contract count should scale with your account, not stay fixed from when you started.
• When switching to a pricier stock: A $200 stock takes 4x the capital of a $50 stock per contract. Make sure you're not accidentally concentrating your whole account in one name.
• Building your portfolio: Running 6-8 simultaneous wheel positions? Enter each strike and target percentage to make sure total deployment fits your risk budget. I keep 50-60% in cash at all times.

Position sizing is the most important decision you make as an option seller. More important than strike selection. More important than DTE. Sell too many contracts relative to your account and a high-probability strategy becomes a one-bad-trade wipeout. I learned this the hard way.

The 5% Rule

Never allocate more than 5% of your account to a single underlying. Conservative? Use 3%. Aggressive? Some stretch to 10%, but I've seen that blow up. At 5%, even if a stock drops 35% after assignment, your portfolio takes a ~1.75% hit. That stings. It doesn't kill you.

Real example: $100,000 account at 5% = $5,000 max per position. On a $50 strike put, that's 1 contract ($50 x 100 = $5,000). At 10% you could sell 2, but now a single bad move affects twice as much capital. I stay at 5%.

Kelly Criterion and Optimal Sizing

If you want the math-nerd approach, the Kelly criterion calculates optimal bet size from your edge and win rate: f* = (bp - q) / b. With a 75% win rate on CSPs, full Kelly says size aggressively. Don't. Full Kelly assumes infinite trades and no emotions. Use half-Kelly or quarter-Kelly. In practice, half-Kelly lands pretty close to the 5% rule anyway.

Diversification Across Underlyings

Sizing is half the equation. Diversification is the other half. Five $50 stock puts at 5% each = 25% deployed. That's fine. But if all five are tech stocks, one sector sell-off hits them all at once. Spread across sectors — tech, healthcare, financials, consumer staples. Stagger expirations so everything doesn't expire the same week.

I run 6-8 positions at 5% each, deploying 30-40% of my account. The rest stays in cash for adjustments, rolling, and new opportunities after pullbacks. If you're 80%+ deployed, you have no room to maneuver when things go wrong. And things will go wrong.

When to Adjust Position Size

Recalculate whenever your account value changes — after a big win, after assignment, or at the start of each month. As your account grows, your contract count at a given strike naturally goes up. After a drawdown, it goes down. That's the point. It automatically prevents you from compounding losses.

Cash-Secured Put Calculator →Covered Call Calculator →

Wheel Strategy Calculator →Wheel Strategy Guide →

Max Capital per Position = Account Size × Max Risk %

Capital per Contract = Strike Price × 100

Max Contracts = ⌊Max Capital / Capital per Contract⌋

Kelly Criterion: f* = (bp − q) / b