Management of risk is essential to the successful options trader as this involves a unique set of risks, including market risk, volatility risk, and time decay risk. Some strategies include:  Diversification: Spreading investments across different stocks, sectors, or asset classes can help reduce overall portfolio risk. Position sizing: Limiting the size of each position to a percentage of the total portfolio can help limit losses if a trade goes against you. Stop-loss orders: Setting stop-loss orders at a predetermined price can help limit losses if a trade moves against you. Hedging: Using options to hedge against potential losses in other positions can help manage risk. Monitoring and adjustment: Continuously monitoring positions and adjusting them as needed can help manage risk and optimize returns.