Small Account Options Trading (Tips, Strategy & Considerations)

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Trading options in a small account is difficult because of the low amount of capital available.

In smaller trading accounts, there are additional difficulties relative to larger accounts.

In this video, I discuss many things related to trading options in small accounts, such as:

1) The difficulties of trading options with limited capital, including risk, number of positions, and trade management.
2) An options strategy that is great for small accounts and can be adjusted easily to decrease the risk/margin requirement.
3) Things to never do when trading options in a small account.
4) Historical simulation and performance of short Iron Butterfly trade in IWM.

If you have questions related to this video, please leave them in the comments section below!

=== LINKS / RESOURCES ===

OptionNET Explorer Trade Analysis Software: https://www.optionnetexplorer.com

Buy a Trial of OptionNET Explorer (w/ Discount): https://www.optionnetexplorer.com/PaymentONEREFA_Trial_ewqp4gui4938a435d2c9e6d1cb18utk0.aspx?id=projectoption

If you need a BROKERAGE account and you’d like to trade with tastyworks, get one projectoption course for free when you open and fund your first tastyworks brokerage account with $2,000 or more: https://www.projectoption.com/free-options-trading-course/

Learn More About tastyworks: https://www.projectoption.com/tastyworks/

=== RECOMMENDED VIDEOS ===

Stock Options Trading 101: https://youtu.be/3bELT5FZCic
Short Iron Butterfly Strategy: https://youtu.be/7CBW_Oidsd0
Iron Condors Explained: https://youtu.be/6UOk_78nVio
Implied Volatility Explained: https://youtu.be/H-NHZq-skFo
Why Early Exercise/Assignment is Rare: https://youtu.be/7pTb1a5IgKM
Options Trading For Beginners (PLAYLIST): https://www.youtube.com/playlist?list=PL33AZa4cv-o58ldr-5zSn4ROx4SZG7Jyo

Comments

SnBergamo says:

Awesome channel, helped me a lot

Lori Favela says:

I have a $2500usd with TDAmeritrade…It's difficult.

First Name Last Name says:

Would it make sense to buy an OTM put calendar spread and buy an OTM call calendar spread on the same stock with the same expirations? Then manage both so you close the winning calendar spread and roll the losing one until it becomes profitable or a less significant loss?

Jean-Paul Faye says:

Margin sounds like a deal with the devil, you never win 👀

David Kasper says:

I have found option level 2 is all you really need. Bullish / Bearish Put Spreads are great ways to trade options.

S A says:

Thanks Chris. Question, wouldn't the straddle call/put be assigned with the underlying movement? If so how would the small account handle this?

Gary Carr says:

Excellent Chris – Thank You. Especially regarding trade management and gamma risk

Jerry Nix says:

Great video Chris, that site is awesome!

joel383 says:

I must have missed in the video you reason for 15 delta strikes?

John Ryan says:

Tastytrade loves the idea of trade small (1-5%) and trade often. Statistically this makes sense, but I definitely hear what you're saying when it comes to account size. I guess I should trade just a few 10 point wide iron butterflies (10-15 delta wings) for a higher probability of profit, compared to a bunch of small winged butterflies (25-40 delta wings). Tastytrade also swears by managing winners at 25% which i think makes sense, especially for iron butterflies.

ArMa Huang says:

Thanks Chris. A quick question. Say if I buy a bull call spread. 800 – 950. Jun ‘20. For $40 ($4000) each. Now, if the stock price went up to 980 in March, what’s the rough estimate of my exit price at the time? Do I get to exit say 90% of my 150 potential earning? Or higher or lower? Is there a formula to work that out? What are the long – short term pros and cons? Thanks .

Itwerk4astrology says:

You are the best! Thank you!!!

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