Free calculator
Position size calculator
Translate a risk budget and allocation limit into a maximum number of contracts, and see which constraint binds.
Inputs
Recommended size
- Contracts by risk budget
- 2
- Contracts by allocation
- 25
- Contracts by concentration cap
- 10
- Recommended maximum
- 2
- Dollars at risk
- $680.00
- Percent of account at risk
- 1.36%
- Capital used
- $1,000.00
For undefined-risk strategies the maximum loss is not bounded, so the risk-budget line cannot be computed — use the allocation and concentration caps and state that max loss may be unbounded.
Assumptions and limits
- Max loss per contract is entered by the user or taken from the profit calculator.
- The number of contracts is rounded down to a whole contract.
Why size from risk, not premium
Sizing from the premium collected ignores how much a position can lose. Sizing from the maximum loss and the account keeps one trade from dominating the outcome.
The recommended size is the smallest of the risk, allocation and concentration limits, so the tightest constraint always wins.
FAQ
- What if max loss is unbounded?
- Undefined-risk strategies have no bounded max loss, so the risk-budget line is unavailable; use the allocation and concentration caps instead.
- Does this account for portfolio correlation?
- No. Correlated positions across tickers can behave like one large position even if each is within its own cap.