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How do I review my journal after a losing options trade?

Wait a day, then answer eight plain questions about the trade. Most losses are either a good trade that went wrong or a broken rule. Your journal tells you which, and what to change.

Options guide · 8-minute read · Updated 2026-10-26

The short answer

After a losing trade, wait at least a day. Then open your journal and answer eight questions about how the trade was chosen, sized and managed. Sort the loss into one of two piles: a good trade that lost or a trade that broke a rule. Then change one thing, not five.

The point of the review isn't to feel bad. It's to find out whether your rules failed, or you didn't follow them. Those need very different fixes.

Why wait a day? Right after a loss, everything looks like a mistake. You'll want to rewrite every rule, swear off a stock forever, or find a quick trade to win it back. None of that is a review. It's the loss talking.

A day later, you can read the trade the way a friend would. That's the version worth learning from.

The trade we'll review (an illustration, not a trade idea)

Here's a journal row for a losing trade on a made-up stock, XYZ, as part of the wheel strategy:

Now the questions.

The eight review questions

Answer each one with a yes or no, plus one line. Write the answers into the journal row.

1. Was the stock on my watchlist before that day? XYZ: no. It was found that morning.
2. Did "Why today?" give a reason from my rules? XYZ: no. "Premium looked good" isn't a rule.
3. Was it sized within my limits? XYZ: about 25% of the account, at the edge. Check against your own limit.
4. Was there earnings or a big event before expiry? XYZ: yes, and it wasn't checked.
5. Did I write a give-up price before the trade? XYZ: no.
6. Did I follow my management rules? XYZ: there were none written for this trade.
7. How was I feeling when I placed it? XYZ: restless. See selling options because you're bored.
8. Was the loss within my per-trade limit? XYZ: −$510 on $18,000 is under 3%. Within most limits, but only by luck, since there was no plan.

Count the rule questions the trade failed. XYZ fails five: questions 1, 2, 4, 5 and 6. This wasn't bad luck.

Bad trade or bad luck?

Every trade lands in one of four boxes. The journal tells you which.

The XYZ trade is bottom right. The fix is simple to name: check earnings before selling, and only trade from the list.

The bottom-left box is the one people get wrong. A loss from a trade that followed every rule is the strategy's cost, not a mistake. If you change your rules after every loss in that box, you'll keep changing a plan that was working.

And the top-right box is the dangerous one. A broken-rule trade that wins teaches you the rule doesn't matter.

Picking the one thing to change

If a review turns up several problems, pick the one that would have stopped the trade. For XYZ, checking the earnings date alone would have kept you out.

Then make the change concrete:

• Bad: "Be more careful."
• Good: "No put unless I've written the next earnings date in the journal row, and it's after expiry."

Add it to your rules page with today's date. Next month, check if you followed it. Our page on checking the earnings date before selling shows where to look.

If you find the same broken rule in three reviews in a row, that's not a slip. It's a pattern. That's a sign to pause new trades for a while, as in when to stop selling options for a while.

What to do with the position itself

The review is about next time. The open position still needs a decision today. Treat it on its own:

1. Would you buy 100 shares of XYZ at $39 today, knowing what the earnings said?
2. If yes, set a give-up price now and sell calls at or above your cost.
3. If no, plan an exit with a limit order.

Don't let the review and the decision blur. "I made a mistake getting in" doesn't mean "I must get out." It means "I must decide, properly, now."

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