Premium selling strategies offer consistent income potential and defined risk, making them ideal for small accounts.
While buying options requires precise timing and direction, selling premium benefits from time decay and probability.
This systematic approach allows traders to grow their accounts steadily while managing risk effectively.
The key is selecting strategies that maximize capital efficiency while maintaining reasonable position sizes.
Successful option selling with a small account requires discipline, proper position sizing, and risk management.
The focus should be on high-probability trades that generate consistent small wins rather than seeking home runs.
This approach helps preserve capital while allowing for steady account growth.
Contents
Credit spreads are the cornerstone strategy for small accounts due to their defined risk and minimal capital requirements.
These spreads involve selling a closer-to-the-money option while buying a further out-of-the-money option for protection.
For example, a bull put spread requires significantly less capital than cash-secured puts while offering a similar probability of profit.
The defined-risk nature means traders can size positions appropriately without risking account blow-up.
Similarly, bear call spreads allow traders to profit from overvalued stocks or market downturns with limited risk.
The key is selecting the appropriate width between strikes.
Wider spreads offer more premium but require more capital.
For small accounts, 2-5 point spreads often balance risk, reward, and capital efficiency.
Related Articles:
Ultimate Guide to Bull Put Spreads
Ultimate Guide to Bear Call Spreads
Decreasing the Risk of Credit Spreads with Iron Concors
How to Condorize a Credit Spread
Risks of Weekly Credit Spreads
Five Mistakes to Avoid when Trading Credit Spreads
How to Adjust a Losing Credit Spread
Option Credit Spreads Destroyed my Life
Top 3 Ways to Trade Credit Spreads for Income
ETFs make excellent vehicles for put credit spreads due to their diversified nature and lower risk of gap moves.
Popular ETFs like SPY, QQQ, and IWM offer liquid options markets and consistent volatility patterns.
This strategy works best when placed 15-30 days from expiration, targeting a 30-45% probability of being in the money.
The premium collected should be at least one-third of the spread width for an acceptable risk-reward ratio.
Small accounts should limit position size to 2-3% of account value per spread.
Iron condors combine bull put and bear call spreads to create a market-neutral position.
This strategy excels in range-bound markets and elevated volatility environments.
Iron condors offer excellent premium collection for small accounts relative to the capital required.
The strategy works best on broad-market ETFs or low-beta stocks.
Place the short strikes at 15 delta for each side, typically resulting in a roughly 85% probability of profit.
While tempting to place many contracts, small accounts should limit exposure to 5% of account value per iron condor position.
Related Articles:
Iron Condors: The Complete Guide with Strategies and Examples
Adjusting Iron Condors
Iron Condor Adjustment Strategies
Calendarizing an Iron Condor
Adjusting the Wings of an Iron Condor
QQQ Iron Condor Example
How to Enter an Iron Condor on Interactive Brokers
10 Best ETFs for Iron Condor
Traditional covered calls require significant capital to hold 100 shares.
The poor man’s covered call (PMCC) achieves similar exposure by buying a deep-in-the-money LEAP call and selling shorter-term out-of-the-money calls against it.
This strategy requires roughly 20-30% of the capital needed for regular covered calls.
Select LEAP calls with 80+ delta and at least 6 months until expiration.
Sell monthly calls against it at 30 delta for optimal premium collection.
The position can generate steady income while benefiting from potential underlying appreciation.
Related Articles:
Poor Man’s Covered Call
Poor Man’s Covered Put
Don’t Get Screwed Trading the Poor Man’s Covered Call
Poor Man’s Covered Call Example
While naked option selling typically requires large accounts, selective short strangles on low-beta stocks can work for smaller accounts if the position size is kept small.
Focus on stable, range-bound stocks with predictable volatility patterns.
Place short strikes at 15-20 delta, collecting a total premium of at least 1/3 the width between strikes.
Never allocate more than 3% of account value to a single strangle position.
Having undefined risk requires strict discipline and immediate adjustment if positions move against you.
Related Articles:
Short Strangle Strategy: Ultimate Guide for 2025
The Short Strangle Options Trade
Short Strangle Adjustments
Iron Condor vs Short Strangle
Small accounts cannot afford large drawdowns, making proper rolling techniques essential.
Roll challenged positions when they reach 200% of the initial credit received or when short strikes reach 80+ delta.
Roll to the next monthly expiration while collecting additional credit.
If necessary, roll strikes away from the money to reduce risk.
The goal is maintaining positive theta while avoiding margin calls or forced liquidation.
Position Sizing: No single position should risk more than 5% of account value. Total portfolio delta dollars should not exceed 50% of account value.
Diversification: Spread risk across multiple underlyings and strategy types. Avoid concentration in single sectors or correlated positions.
Loss Limits: Set maximum drawdown limits per trade (200% of credit received) and per month (10% of account value).
Probability Selection: Focus on trades with a 65%+ probability of profit. Avoid lottery ticket trades that risk account stability.
Below you will find some example trades to look through:
QQQ Iron Condor Example
No Stress Iron Condor Trade Example
TSLA Earnings Trade Example
GS Condor Example with Adjustments
DE Bear Call Spread Example
OIH Condor Example
To view more example trades go to the below link and search “example”
Option Education – The Best of Options Trading IQ
Free eBooks:
Mastering Credit Spreads
How to Fix Losing Option Trades
Ultimate Guide to Option Greeks
Earnings Season Mastery
Excel Templates:
Wheel Tracker Template
Cash Secured Put Calculator
Profit Tracking Spreadsheet
Successfully trading options with a small account requires focusing on capital-efficient strategies and strict risk management.
Premium selling offers a systematic approach to growing accounts steadily over time.
The key is maintaining discipline, proper position sizing, and never risking account-ending losses.
Start with basic credit spreads, master their mechanics, and then gradually incorporate additional strategies as account size grows.
Remember that consistent small wins compound over time, while a single oversized loss can derail progress.
Trade small, trade often, and let probability work in your favor.
We hope you enjoyed this article on the best options strategies for small accounts.
If you have any questions, please send an email or leave a comment below.
Trade safe!
Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.
