Options Position Size Calculator: How Many Contracts Fit Your Risk
· 2 min read
This calculator works out how many option contracts fit a loss limit you choose before you place the trade. Enter your account size, the percent of the account you are willing to lose on one trade, the option premium per share, and the share of the premium you plan to lose before you exit.
How the calculation works
The loss limit is your account size multiplied by the risk percent. One contract costs the premium multiplied by 100. If you plan to exit after losing half of the premium, the planned loss per contract is half of that cost. The number of contracts is the loss limit divided by the planned loss per contract, rounded down to a whole number.
Why decide the loss before the trade
Options can lose most of their value quickly, so the size of the position is the one thing fully under your control. Fixing the maximum dollar loss first keeps one trade from deciding the month. Many traders use a small percent of the account per trade, but the right number depends on your account, your strategy and how much loss you can accept, and it is your own rule to set.
Limits of this calculator
Planning to exit at a certain loss does not guarantee that you will get that price: a fast move, a wide bid-ask spread or a gap can cause a larger loss, and an option bought for a defined premium can lose all of it. The tool also ignores commissions and fees. For accounts under 25,000 dollars, a margin account that makes four or more day trades in five business days can run into the pattern day trader rule, so check your broker’s current rules.
The default values are an illustration, not a recommendation. Trading involves risk of loss.
Curious how mirroring works on a real account? The 7-day free trial connects your account so you can check the fills yourself.
Disclosure: that’s an affiliate link — I may earn a commission if you sign up for a paid plan, at no extra cost to you. There’s a free trial if you want to look around first.
Related reading