Options trading has a high level of overall risk, as the value of options is derived from the underlying asset. To manage risk in options trading, traders can use various techniques such as diversification, position sizing, and stop-loss orders. Traders can also use risk management strategies such as the covered call, where they hold a long position in an asset and sell call options against it to generate income. Another strategy is the protective put, where a trader holds a long position in an asset and purchases put options as insurance against potential losses. Additionally, it's essential to have a solid understanding of the underlying asset, the options market, and the mechanics of options trading before engaging in any options trading.

Proper risk management in options and futures trading involves implementing strategies to minimize potential losses and maximize returns. Some key steps to consider include the following:

1. Understand the underlying asset: Before trading options or futures, it is crucial to have a solid understanding of the underlying asset, including its price movements, volatility, and fundamentals. This can help you identify potential risks and opportunities.
2. Diversify your portfolio: Diversifying your portfolio by spreading your risk across different assets and markets can help reduce the impact of any one trade going against you.
3. Use stop-loss orders: Stop-loss orders are a way to automatically close a trade if it reaches a certain level of loss. By using stop-loss orders, you can limit your potential losses.
4. Position sizing: is the most important process of determining the appropriate number of contracts or shares to trade based on your risk tolerance and capital. This can help you control the amount of risk you are taking on.
5. Use risk management strategies: Options and futures trading offer a variety of risk management strategies like the covered call, protective put, and spread trading. These strategies can help you manage risk and generate income.
6. Keep track of the market conditions: The market conditions are constantly changing, and it's essential to keep track of the latest developments. This will help you to adjust your strategy accordingly.
7. Have a plan and stick to it: Have a well-defined trading plan, including entry and exit points, and stick to it. Emotions can often lead to impulsive decisions, which may cause losses.
8. Continuously monitor your trades: Monitoring your transactions will help you stay on top of any potential problems and make adjustments as needed.

It's important to note that even with proper risk management, options and futures trading can still be risky and may only be suitable for some investors.