The Rules of the Jungle: Non-Negotiables for Every Options Trader

Markets do not care about your goals, your story, or how badly you need this trade to work. The traders who survive long enough to compound are the ones who internalize a small set of rules and follow them without exception.

Rule one: never risk more than 1–2% of your account on a single trade. Position sizing kills more accounts than bad strategy selection. Rule two: every trade has a written exit plan before entry. Profit target, max loss, time-based exit. Rule three: do not trade to recover losses — the market has no memory of yesterday and neither should you.

Rule four: respect IV rank. Selling premium when IV rank is below 30 is paying retail; buying premium when IV rank is above 70 is paying for crush. Rule five: journal every trade. Pattern recognition only works on data you actually wrote down. These five rules will not make you rich. Ignoring them will make you broke.

Frequently Asked Questions

What if a trade exceeds my 1–2% risk rule because of a gap?

Defined-risk structures (verticals, iron condors) cap your loss at the debit paid or width minus credit received. Undefined-risk structures can blow through your sizing on gaps — which is why position sizing alone is not enough; structure choice matters too.

How detailed does a trade journal need to be?

Entry price, strike, expiration, IV rank at entry, thesis in one sentence, and exit reason. That's enough to find your patterns within 50 trades.

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