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Why Regret Minimization Might Be the Most Underrated Tool in Your Options Playbook
“The cost of discipline is always less than the cost of regret.” – Robin Sharma
I spend a lot of time in The Option Premium talking about risk.
Defined risk. Implied risk. Portfolio risk. Position sizing.
And for good reason—managing risk is non-negotiable in options trading.
But today I want to talk about something that’s often overlooked…
something that sits beneath the math and eats away at traders quietly: 👉 Regret.
🎭 The Emotional Cost of Options Trading
Every trade carries two price tags:
- The actual loss or gain, measured in dollars.
- The emotional residue, measured in regret, self-doubt, or frustration.
Regret is the voice that says:
- “I knew I shouldn’t have sold that put spread right before earnings.”
- “I almost pulled the trigger on that iron condor. Should’ve.”
- “Why didn’t I just size smaller? I wouldn’t feel this sick to my stomach right now.”
The danger isn’t the emotion itself—it’s what comes next:
Regret hijacks your decision-making process. It makes you revenge trade. Or freeze up. Or abandon a strategy that still works—because you feel like it failed.
📉 Traditional Risk Management Doesn’t Account for Regret
Classic options education tells us to manage risk with:
- Probability of profit
- Max loss
- Risk-reward ratios
- Beta-weighted delta exposure
All critical. But none of these account for emotional volatility.
That’s where regret minimization comes in. It’s not about optimizing your next trade for profit—it’s about protecting your future self from making emotional, unforced errors.
🧠 Enter: The Regret Minimization Framework
This concept was popularized by Jeff Bezos, who made major life decisions by asking: “When I’m 80, will I regret not doing this?”
We can adapt that mental model for options trading: “One week from now, if this trade goes against me, will I regret how I structured it?”
Here’s how to apply it in practice.
🔧 How to Trade With Regret Minimization in Mind
1. Size to Sleep, Not to Impress
Sizing is emotional. We often size up because we “feel good” about a setup.
But ask yourself: “If this trade goes to max loss, will I regret how much capital I risked?”
Your answer should always be no. If not, cut the size. Regret isn’t worth the extra 0.5% potential return.
2. Define Your Exit Plan Before Entry
Most regret stems from indecision during fast-moving markets.
“Should I have rolled that spread?”
“Should I have closed early?”
“Should I have held through earnings?”
Create conditional exit rules in advance—then execute them without emotion.
Your goal isn’t to be perfect. It’s to avoid post-trade regret that leads to irrational adjustments.
3. Use Trade Structures That Fit Your Emotional Profile
Don’t like undefined risk? Stay away from naked puts on volatile names.
Hate watching gamma ramp up near expiration? Use longer-dated options or wider spreads.
Tailor your toolbox to the you that exists under pressure, not just the one that exists at your desk at 9:30 AM with a cup of coffee.
4. Plan for Imperfection
One of the greatest sources of regret? Thinking you should have known better.
But markets are messy. Pricing is noisy. Trades don’t go wrong because you’re dumb—they go wrong because risk is real.
When you normalize imperfection as part of the process, regret has less room to grow.
⚖️ Risk vs. Regret: The Hidden Tradeoff
Let’s say you have two trade setups:
| Trade | Probability of Profit | Max Loss | Regret Potential |
| Short Strangle | 70% | Undefined (with management) | High if gap occurs |
| Wide Iron Condor | 60% | Defined | Low — emotionally manageable |
In dollar terms, the strangle might have more theoretical edge. But if it causes you to stress-check your portfolio 10 times a day, hesitate on future trades, or abandon your system…it might not be worth it.
Your best strategy isn’t the one with the most alpha. It’s the one you can execute with clarity, discipline, and minimal emotional drag.
🧘♂️ Regret as a Signal, Not a Sentence
We’re all going to feel regret at some point. It’s baked into trading.
The goal isn’t to eliminate regret entirely.
It’s to use it as a checkpoint:
- Did I follow my rules?
- Did I trade my plan?
- Was this a repeatable decision—even if it didn’t work out?
If the answer is yes, regret fades. If the answer is no, you’ve found the next upgrade in your system.
📬 Final Thought: Protect the Trader, Not Just the Trade
You’ll hear it often in The Option Premium: Protect your capital. But also protect your confidence.
Confidence is your real edge in the long game. And regret is its kryptonite.
So structure your trades not just for profits, but for psychological resilience. Because the market doesn’t just test your strategy—it tests your soul.
👉 Want weekly insights on both the mental and mechanical side of options trading?If you’re serious about options trading I’d encourage you to subscribe to my free weekly newsletter, The Option Premium. Each week, I break down actionable strategies, trade setups, and educational insights grounded in 20+ years of professional options trading experience.👉 Sign up here to get each issue delivered straight to your inbox. See you in the next issue.
Probabilities over predictions,
Andy Crowder
