Hello Traders!
Today, let’s decode one of the most powerful money management strategies in option selling – the 1% Rule. If you’re serious about generating consistent income and preserving capital while growing your account, this rule might become your best friend. Let’s understand how this simple risk formula can be a game-changer for option writers.
What is the 1% Rule in Option Selling?
The 1% Rule simply means you should not risk more than 1% of your total capital on a single trade. It’s a powerful rule that helps you control losses, stay disciplined, and survive during volatile market phases.
Why Option Sellers Love the 1% Rule
How to Apply the 1% Rule in Real Trading
Conclusion
The 1% Rule in Option Selling isn’t just a technique—it’s a mindset. Traders who follow this rule last longer, lose less, and win big over time. It’s not about being right every time—it’s about surviving and compounding.
Do you follow the 1% Rule in your option selling strategy? Let me know in the comments below and let’s grow together, and yes Guys, if you’re interested in learning Option Writing from scratch, do let me know in the comment box. I’m planning to bring a complete educational series right here with simple explanations and real examples, so that you can understand Option Writing step-by-step – from Zero to Pro! Drop a comment if you're excited, and let’s start this journey together!
Today, let’s decode one of the most powerful money management strategies in option selling – the 1% Rule. If you’re serious about generating consistent income and preserving capital while growing your account, this rule might become your best friend. Let’s understand how this simple risk formula can be a game-changer for option writers.
What is the 1% Rule in Option Selling?
The 1% Rule simply means you should not risk more than 1% of your total capital on a single trade. It’s a powerful rule that helps you control losses, stay disciplined, and survive during volatile market phases.
Why Option Sellers Love the 1% Rule
- Capital Protection: You stay in the game longer even after multiple losing trades because your capital isn’t exposed to large drawdowns.
- Emotion Control: Knowing your risk is capped helps you stay calm and execute your strategy without panic.
- Consistency: Following the 1% Rule creates a systematic approach to trading and avoids over-leveraging.
- Compounding Growth: By protecting capital and adding small, steady returns, your account grows exponentially over time.
How to Apply the 1% Rule in Real Trading
- Know Your Capital: If your capital is ₹5,00,000 – risk only ₹5,000 per trade (1% of total capital).
- Define Max Loss Before Entry: Calculate the worst-case loss scenario based on stop loss or adjustment strategy.
- Choose Safe Strategies: Use credit spreads, iron condors, or short straddles with proper hedging to keep max loss in check.
- Stick to Risk Plan: Even if the trade “looks perfect,” don’t risk more than 1% – protect first, profit later.
Conclusion
The 1% Rule in Option Selling isn’t just a technique—it’s a mindset. Traders who follow this rule last longer, lose less, and win big over time. It’s not about being right every time—it’s about surviving and compounding.
Do you follow the 1% Rule in your option selling strategy? Let me know in the comments below and let’s grow together, and yes Guys, if you’re interested in learning Option Writing from scratch, do let me know in the comment box. I’m planning to bring a complete educational series right here with simple explanations and real examples, so that you can understand Option Writing step-by-step – from Zero to Pro! Drop a comment if you're excited, and let’s start this journey together!
Rahul Pal (TradingView Moderator)
Live Market Analysis on YouTube (8:45 AM - 3:30 PM): spf.bio/TArir
Free Telegram: spf.bio/c1lkb
Join Trading Community: realbullstrading.com
WhatsApp: wa.me/919560602464
Live Market Analysis on YouTube (8:45 AM - 3:30 PM): spf.bio/TArir
Free Telegram: spf.bio/c1lkb
Join Trading Community: realbullstrading.com
WhatsApp: wa.me/919560602464
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Rahul Pal (TradingView Moderator)
Live Market Analysis on YouTube (8:45 AM - 3:30 PM): spf.bio/TArir
Free Telegram: spf.bio/c1lkb
Join Trading Community: realbullstrading.com
WhatsApp: wa.me/919560602464
Live Market Analysis on YouTube (8:45 AM - 3:30 PM): spf.bio/TArir
Free Telegram: spf.bio/c1lkb
Join Trading Community: realbullstrading.com
WhatsApp: wa.me/919560602464
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.