Sizing options

The premium you pay is your max loss.

When you buy an option, the premium is the most you can lose. Options can go to zero in a single session. Size by dollars at risk, not contracts. Each contract controls 100 shares, so a $5 option on 10 contracts is $5,000 at risk.

Max loss is capped at the premium paid.

Strike $100, premium $3.00 per share, $300 per contract. Breakeven at $103. If the stock never reaches $103 by expiration, the entire $300 is gone. The call has defined, capped risk. The position sizing rule still applies: that $300 must fit inside your 1% limit.

This one is an animated diagram in the app. See it in Vero.

Apply the same dollar rule.

If your account is $10,000 and you risk 1% per trade, you can spend $100 on options premium. That is one contract of a $1 option, not five contracts of a $5 option. A debit spread limits your max loss to the net premium paid. A $2-wide spread bought for $1 costs $100 per contract maximum, keeping options risk in line with your normal dollar limit.