Position size calculator

How the calculation works

Three steps, and the arithmetic is deliberately boring:

1. Risk budget = account size × risk percentage. On a $25,000 account at 1%, that is $250 you are willing to lose on this trade.
2. Risk per contract = (entry price − stop price) × 100, because one standard equity option contract controls 100 shares. An entry at $3.40 with a stop at $2.55 risks $85 per contract.
3. Contracts = risk budget ÷ risk per contract, rounded down. $250 ÷ $85 = 2 contracts.

Why this matters more than the entry

Two traders can take identical alerts and end the year in opposite places. A strategy that wins 55% of the time at 1.5:1 has a real edge — and still has roughly a one-in-three chance of hitting a six-trade losing streak somewhere in a hundred trades. At 2% risk that streak costs about 12% of the account and is survivable. At 10% it costs nearly half, and the arithmetic of recovery turns against you: down 50%, you need 100% to get back.

Three things this calculator assumes

• You will honour the stop. The output is meaningless if the stop becomes a suggestion when price approaches it.
• You can get out near it. On wide-spread or low-volume contracts the realised loss will exceed the modelled one. Check the spread before sizing.
• The position is single-leg. Spreads and multi-leg structures have defined risk that changes the arithmetic — size those on maximum loss instead.