Step into the world of smart risk management and confident decision-making with Momen's exclusive toolbox!
Options Position Size Calculator
As an options trader, it is essential to have a clear understanding of the potential risk and reward associated with each trade in terms of monetary value. Utilize our Options Position Size Calculator to swiftly calculate the number of contracts you should purchase to stay within your risk parameters for this trade.
How to use this tool:
Select the trading style: Day Trading or Swing Trading.
Input your stop-loss level for the stock.
Enter the details of the contract you intend to trade.
Specify the amount you are willing to risk in this trade.
Click the 'Calculate' button to determine the number of contracts you should purchase to stay within your risk parameters for this trade.
Using this calculator will be extremely beneficial for calculating position sizes and managing risk in day trading. It is particularly useful for ATM (At-The-Money) or slightly OTM (Out-of-The-Money) options, with strike prices just one or two levels higher, expiring within the same week up to 2 months.
Note: DOTM (Deep-Out-of-The-Money) options and contracts with wide spreads may not yield favorable results. Momen strongly advises against using these contracts in day trading. In case it is necessary, it is recommended to manually reduce the position size by 20% to mitigate potential risks.
Trading Planer Use it consistently for one month to develop a habit of discipline.