I've been trading seriously for about a year and have only recently discovered this forum. I've had some good success with short options strategies on equities as well as futures (mostly credit spreads and short strangles).

I'm still a beginner, but I've learned enough to realise that selling options premium is a strategy which relies on lots of small gains offset by occasional large losses. With that in mind, I'd appreciate some thoughts from more experienced members here about how to approach money management.

When you sell premium, trades often move against you at first before recovering when theta decay starts to get to work. What's more, short option trades often have "unlimited" risk (at least in theory), so it's hard to set a stop loss in the same way you would with an outright trade.

So a couple of questions which I would really appreciate help with:

1. If I'm trying to cap my maximum risk per trade at a certain percentage of my account size, how should I calculate max risk? Is it the margin requirement for the position? A certain percentage of my account size (which would often get triggered when trades initially move against me before recovering)? Something else?

2. Options on futures in particular are pretty illiquid. That can make closing and managing positions pretty difficult, particularly when one leg of a trade is well out of the money. Is it better to close trades early to lock in profits while they're is still liquidity at my strikes? Or if one side is well out of the money, is it better to hold to expiry (knowing your position will mostly likely expire worthless, but tying up capital with the "tail risk" of a big move against me.

I know there aren't any easy answers to these questions, but any thoughts are greatly appreciated as they help me too develop and learn as a trader. Thanks in advance!