I see this question pop up almost daily, so I thought I’d break down the realistic capital requirements for getting started with options selling. Spoiler alert: You’ll need more than your average WSB YOLO account, but probably less than you think.

The Short Answer

For selling options effectively, I recommend starting with at least $5,000-$10,000 in a margin account. However, $15,000-$25,000 is ideal if you want to implement proper position sizing and risk management while generating meaningful premium.

Why These Numbers?

1. Pattern Day Trading (PDT) Rule: While less relevant for theta strategies since we’re typically holding positions longer, having $25k gives you flexibility to manage positions actively if needed.
2. Position Sizing: With proper risk management, you shouldn’t risk more than 1-3% of your account on any single trade. With a $5k account, that’s $50-150 per trade – enough to start with basic credit spreads or cash-secured puts on cheaper stocks.
3. Margin Requirements: If you’re planning to sell naked puts (my preferred strategy), most brokers require 20% of the strike price as maintenance margin. For a $50 stock, that’s $1,000 per contract.

Strategy-Specific Requirements

The Wheel Strategy

• Minimum recommended: $5,000-$10,000
• This lets you sell CSPs on stocks in the $25-50 range
• Remember: You need cash to secure the puts!

Credit Spreads

• Can start with as little as $2,000-$5,000
• Defined risk, but harder to manage when tested
• Better for smaller accounts but requires more active management

Naked Options (Advanced)

• Minimum recommended: $15,000-$25,000
• More margin efficient but higher risk
• Needs larger capital buffer for margin requirements

Real Talk: What You Can Expect

With $10,000:

• Realistic monthly return target: 1-2% ($100-200)
• Can run 2-3 positions simultaneously
• Limited to stocks under $50 for CSPs
• Can do multiple credit spreads

With $25,000:

• Realistic monthly return target: 1-2% ($250-500)
• Can run 4-5 positions simultaneously
• Access to more premium-rich underlyings
• More flexibility in position management

Common Pitfalls to Avoid

1. Over-leveraging: Just because you can sell 10 contracts doesn’t mean you should
2. Insufficient cash reserve: Keep 30-40% cash for adjustments
3. Position sizing too large: Stay small while learning
4. Chasing high IV: Higher premium = higher risk

Bottom Line

Start with what you can afford to lose, but make sure it’s enough to implement proper risk management. $5k is the absolute minimum, $10k is better, $25k is ideal.

Remember: Options selling is a marathon, not a sprint. Focus on consistent small wins rather than home runs. Your account will thank you.

What’s your experience with starting capital in theta strategies? Share your thoughts below!

Obligatory: This isn’t financial advice. Do your own DD.