Options Trading Plan Template: Write Down Enough to Survive

The difference between a gambler and a trader is the written plan. Options multiply both gains and losses, so the plan must cover setup, sizing, risk, adjustments, and psychology in advance. Use this template as your starting point - adapt it to your own edge, and review it every month.

Section 1: Your Edge Statement

Write, in one clear paragraph, why your strategy should make money. Vague edges ("momentum") are traps; specific ones ("sell OTM puts at 15-20 delta in flat regimes when India VIX is between 12 and 18, book at 50% of max") are testable. If you cannot state the edge precisely, you do not have one yet.

Section 2: Market Conditions That Trigger Entries

  • Underlying and expiry window
  • Volatility regime (IV rank thresholds)
  • Trend/range filter (e.g., trade only when index above 200-DMA)
  • Events to avoid (earnings, RBI, Budget within window)

Section 3: Position Sizing Table

Account size: ₹________
Risk per trade (1%): ₹________
Max simultaneous open risk: 3-5% of account
Lots = risk amount / defined max loss per lot

Section 4: Execution Rules

  1. Entry trigger and exact checks (strike distance, delta, premium)
  2. Profit target (fixed % or 50% of max profit for credits)
  3. Stop-loss (price, credit, or time based)
  4. Adjustment trigger (e.g., wing tested = roll or close)
  5. Last allowed day to hold (e.g., no new weekly entries after Tuesday)

Section 5: The Psychological Sub-Rules

  • Max trades per day/session (e.g., 2)
  • Cool-down after a loss above risk (e.g., no new trade same day)
  • Maximum daily loss that pauses trading (e.g., 2%)
  • Friday rule: no revenge trades, ever

Section 6: Review Cadence

Fix a monthly review: compute win rate, expectancy, max drawdown, and compare every trade against the plan. Adjust only strategic rules (trigger, sizing) monthly; never tactics intraday. The plan is a living document, but like a constitution, amendments come slowly and only with evidence.

Section 7: The Journal Format

Trade #, date, setup, side, strike(s), expiry, debit/credit,
lot(s), risk ₹, target ₹, stop ₹, exit price, P&L,
emotion before entry, lesson

A One-Week Sample

Monday: review IV rank; define week's bias from trend filter. Tuesday: if conditions met, place one defined-risk entry per the table. Wednesday: manage only per the adjustment rules. Thursday: expiry day - no new risk; close according to plan. Friday: weekly review, journal update, plan any roll for next week.

SEBI Disclaimer

Options trading involves substantial risk. This template is educational material, not investment advice. Ensure your plan is compliant with regulations and sized to capital you can afford to lose.

The Loss-Streak Procedure, Written as Code

A plan without a loss-streak subroutine is an unused template. Write the procedure in advance, with thresholds:

  1. After three consecutive losing strategies or a 5% drawdown: reduce position size by half for the next five trades.
  2. After a 10% quarterly drawdown: go to paper mode for one full week, trading the same signals with zero capital.
  3. After a 15% deep drawdown: freeze new entries, flatten risk, and require a written strategy review before any new position.

The plan's job is to make the "pause" decision automatic, because the paused trader is the one who returns to the market with capital.

Fill and Slippage Log: The Cost Auditor

Add a fill-quality tab to the journal and measure against the benchmark mid at decision time:

  • Every entry and exit logs theoretical mid, actual fill, and the difference in points and rupees.
  • Weekly, compute the average slippage per instrument class; ATM index options should slide under 1-2 points, far-OTM wings should be audited for worse behaviour.
  • Feed the fill log back into the backtest cost model quarterly; slippage is a strategy property, not a broker excuse.

Journal Categories: Decouple Decision From Outcome

A journal that only records P&L teaches nothing; structure it around the decision quality instead:

  • Setup quality (did the entry match the plan's checklist) separated from outcome (good entry, bad outcome is still a good entry).
  • Regime tag: which market state produced this trade; the journal's regime-tagged win rates are the honest strategy report card.
  • Emotional state column: skipped-rule violations and revenge entries are the only columns that predict future drawdowns.

Quarterly Strategy Review, With an SLA

Plan documents expire. Give the review a date and an output:

  • Every quarter, export the year's trades and compare each strategy's realised P&L, Sharpe and max drawdown against the backtest's promise.
  • Any strategy whose realised Sharpe trails its backtest by more than 30% gets a written diagnosis: cost model drift, slippage creep, or regime mismatch?
  • Retire one strategy a quarter that cannot articulate its edge after three months live; camping on zombie strategies is how drawdowns localise.

What to Print on the Desk

The plan works best as a physical artifact, not only a file:

  • One A4 sheet: entry checklist, stop rules, position sizing table, the loss-streak subroutine.
  • One line of truth: "No trade is worth breaking the loss-streak rule, ever."
  • A laminated table of the 24-hour red-line: daily loss cap, weekly loss cap, monthly loss cap, each in rupees and percent.

An options trading plan is a contract with future-you, the one who trades at 14:50 with adrenaline. Every clause, the sizing table, the loss-streak pause, the journal categories and the slippage audit, exists to make that version of you slower and smaller. The plan loses its value the moment it is not followed; it earns its value on the exact trade where following it feels impossible.