One approach would be to multiply your maximum postion risk (say, 1%) by your account balance (say, $100K) and then divide the product by the largest historical system loss (say 11%). This would yield a maximum position size of $9,091. To adjust to account book changes, Richard Dennis had the Turtles reduce their trading size by 20% if their account balance lost 10% until the account recovered. Others believe you should also reduce your position size after particularly successful periods as well to avoid the temptations of hubris.

Have read several books, from Market Wizards, and the sequels to it, and lots of others that advise taking a position size in any 1 investment no greater than 3% of your total account.  Have recently seen a couple of others, Larry Pasavento who wrote "Trade What You can See" and some books on Fibs and elliot waves and Gann, who advises to use the 3% as a guide for your stops, to risk no more than 3% stop loss before you would get out.   I would take small positions at first until you feel comfortable with it.  Like I've seen Matt and heard Jeff Macke on Fast Money say though, "sell until you can sleep".  If you're going to be nervous and worried about it, take a smaller position.  I've done better with smaller positions in options, then gotten overconfident and/or greedy, increased my position size by double, instead of risking several hundred, risked a couple thousand on an option trade and gotten burned.   The gains aren't as much with smaller positions, but you won't lose a lot on the flip side if it goes against you.  That's what's dangerous about options too, you can't have a stop like with stocks....always use a stop before or as you're entering the order to buy or sell short a stock.