Limiting Undefined Risk Trades
Limiting undefined risk trades is vital as you manage risk and grow your account. Option strategies with undefined risk require more capital and may not be optimal for all account types.
Kirk Du Plessis
Apr 7, 2021
Option strategies with undefined risk like strangles and straddles must be limited based on account size because of the capital requirements they carry. I'll show you why if you're trading a smaller account you'll want to avoid these types of strategies even though they generally produce the greatest profits. Remember that your goal as a trader is never to blow up your account and lose all your money. So, trading risk defined strategies at this stage is still a very profitable way to grow your account.
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