Options trading is both highly leveraged and highly lucrative. It's very easy to consistently generate abnormally high returns on individual trades (20%, 50%, 70% etc.) but that is just for that trade.
With the ability to easily over-leverage your account we have to put in place some sort of barrier to prevent over allocation. In this lesson I'll explain why I believe that your maximum usage should be around 50-60% of your total account. This means keeping cash on hand of around 40-50% at all times.