The short version: decide the cash loss you can afford before choosing an options strategy. Size the idea, calculate the full position's worst case, protect money needed soon, understand leverage and expiry, and write the exit plan before the fill. A correct market view can still lose money when the premium, timing or account exposure is wrong.
Rule 1: Risk a Fixed, Small Slice per Idea
Decide what one idea is allowed to cost you before you look for ideas. One to two percent of the account per position is an illustrative sizing range, not a universal professional standard. The exact number is personal. What is not negotiable: it is fixed, it is written down, and it is the same for the exciting trade and the boring one. The moment sizing follows conviction, one loud opinion can undo a year of discipline.
Rule 2: Know the Worst Case Before You Enter
For a fully paid long call or put, the option-position loss is limited to the premium and fees. Defined risk is the feature, but exercise can create a separate stock position with funding and market risk. If a position exists in your book whose worst case you cannot state in one sentence, that is the position that can end accounts. Undefined short options have no place in this framework.
Rule 3: Barbell the Book
Most of the account covers liquidity and capital preservation through cash and Treasury bills. Gold is a separate volatile allocation, not a guaranteed safe reserve. A small sleeve takes the concentrated risk. That is my use of the barbell idea associated with Nassim Taleb: protect money needed soon and limit the capital exposed to speculative loss. The options sleeve is the sharp end of the barbell. This is the same structure the desk describes in the member portal.
Rule 4: Leverage Through LEAPS, Not Margin
When you want leveraged exposure, a fully paid long LEAPS option defines the option loss without borrowing to buy stock. It can still expire worthless, and exercise can create stock and funding obligations. Brokers may close positions under their account-risk policies, so defined option loss is not a guarantee against liquidation. I pay the premium for a bounded option position and manage expiry before it becomes an account problem.
Rule 5: Write Every Trade Down
Entry, size, thesis, worst case, exit plan. One line each, written before the fill. The journal is where discipline becomes measurable, and publishing calls is the strongest version of it. Our own scorecard lives in public: nine months ago we predicted $100 oil, on the channel, before the move. That habit is available to anyone. It costs a sentence per trade.