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I use the following formula to determine the optimal trading size for my options positions:

Size = (p*(R+1)-1)/R

R = profit/loss ratio

p = chance of winning trade

Let's assume that we have a winning trading system
that wins 40 percent of the time and has a profit/loss
ratio of 1.6.

Using the formula:

Size = (0.4*(1.6+1)-1)/1.6

Size = 0.025

This number states that we should risk 2.5 percent of
our capital on each trade to maximize growth.
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