An Options Trade Checklist Before Every Entry

A checklist cannot remove market risk, but it can reduce avoidable process errors.

Thesis

• What specifically must happen?
• By what date?
• What would prove the thesis wrong?

Structure

• Why this strategy instead of shares or a simpler option?
• What are maximum profit, maximum loss, and break-even?
• How do theta and vega affect the plan?

Market mechanics

• Are bid-ask spreads reasonable?
• Is there enough volume or open interest to support an exit?
• Are earnings, dividends, or corporate actions scheduled?

Account and assignment

• Can the account support exercise or assignment?
• What happens if one spread leg is assigned early?
• Are there broker-specific expiration procedures?

Exit

• Profit-taking level
• Maximum acceptable loss
• Time-based exit
• Expiration-day plan