Options position size calculator: how many contracts fit your account?
The premium is the small number. The obligation is the big one. Enter your account, your cap per stock and the strike — see how many contracts truly fit, and what one contract puts on the line.
How it works: one short put obliges you to buy 100 shares at the strike, so one contract = strike × 100 in cash. Your cap = account × the percentage you chose. Contracts = cap ÷ cash per contract, rounded down — never up. The premium is money in, so the worst case per contract (stock to zero) = cash per contract − premium × 100. Fees left out.
The premium is what you collect, not what you risk
A beginner sees "$120 for one contract" and sizes the trade by that number. The obligation is the strike × 100 — in the default example (hypothetical XYZ, an illustration, not a trade idea) that is $4,000 behind a $120 premium. If the stock fell to zero, the premium would cover about 3% of the loss. Size by the full obligation, every time. That is why the cash-secured put in the wheel strategy starts with "cash-secured": the money is set aside before the trade, not after. More on what you're agreeing to in the cash-secured put, explained.
Why the cap is a percentage, and why it's small
One stock can gap down on news and stay down. A cap of 10–20% of the account per stock means one bad assignment hurts but doesn't end the account. Rounding down to a whole contract is part of the rule: if 1.9 contracts fit, you trade 1. If less than 1 fits, the stock is too expensive for the account at that cap — the fix is a cheaper stock or a smaller plan, not margin. In Canada, whether a registered account (TFSA, RRSP) may hold a cash-secured put depends on the broker, and options permissions differ by broker everywhere — check before you plan around it.
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22 plain-English modules from complete beginner to running the wheel: covered calls, cash-secured puts, assignment, rolling, the math and the risk rules — with a scored quiz after every part and a daily deals board that applies the same rules to real markets.
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