The rapid growth of retail participation in India’s derivatives market has increased the importance of understanding factors influencing options trading performance. This study examines the roles of behavioural biases, financial literacy, risk management practices, and trading behaviour among retail options investors in India. Primary data were collected from 588 retail investors actively participating in equity and index options trading and analysed using Partial Least Squares Structural Equation Modelling (PLS-SEM). The findings indicate that behavioural biases and risk management practices significantly influence trading behaviour, while financial literacy does not significantly affect trading behaviour. Financial literacy and risk management practices have significant positive effects on options trading performance, whereas behavioural biases do not have a significant direct effect. Trading behaviour significantly influences options trading performance. Mediation results show that trading behaviour mediates the relationships between behavioural biases and options trading performance and between risk management practices and options trading performance, but not between financial literacy and options trading performance. The study contributes to behavioural finance literature and offers implications for disciplined retail options trading.
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