Options: Limiting from "summary" of Basics of Option Trading by Sankar Srinivasan

Options limiting is a way of restricting the amount of risk you are willing to bear when trading options. It allows investors to limit maximum losses while still making profits from successful trades.

Limiting options can help reduce the probability errors which could put your capital at risk. You can set hard boundaries for yourself, outlining how much time and money you want to devote to each trade.

When considering limiting with options, be sure to factor in option prices and account size. This will allow you to properly calculate how much you can adjust existing positions and place new ones without placing too much strain on your overall capital resources.

Establishing rules and limits before entering into options trading will make sure that you aren't taking on too much risk in one trade. Sticking to those limits will allow you to stay disciplined even when market prices are rapidly changing.

Maximum operational loss is usually the main factor when looking at options limiting. Setting a benchmark for the highest possible limitation will stop you from exceeding initial desired levels of exposure.

While some traders may have big ambitions of maximizing returns, keeping track of options limiting strategies helps ensure that losses are kept manageable.

Controlling emotions is an essential part of limiting with options as fear and greed often lead to costly decisions being made. Staying aware of these influences and anchoring back to your pre-established limits can stop panic leading to rash decisions.

Finally, it is important to remember that options limiting gives you the option to gauge potential returns higher than in regular stock trading but always play on the safe side. Taking little risks and following orders works best.