I often think about people who trade options as much as I do all day long. I wonder should they utilize the best discount brokers that area available and most importantly, how do they keep records of all the their trade?
The point of documentation within the complex profession of option trading in my view is simply about it is important there exists. Just how do you determine you’re successful in trading options if you don’t know your profits and losses per stock, per trade type, per day, each month for the whole year? For me personally the solution has always been a variety of 3 methods. The very first approach to course is usually to make use of a spreadsheet to hold a current total of stocks I own. I keep another spreadsheet to record all of my expenses for every single month, and that is vital to find out the grand total of most income sources and expenses including trading fees.
The most important tool I use for all my stock and option trading is Microsoft Access. Using the Access database is the ideal tool for recording each stock or option trade. For options I have got 39dexupky column that represents the quantity of contracts for each option trade as well as for options one contract represents 100 shares of stock. Basically If I buy and option contract then your contract number will be negative and if I sell then the contract number could be positive. Another columns within the table could be for the price tag on the option and the trade fee, so to calculate the whole for virtually any option trade will be (100*Price*Contract) – Trade fee. Using SQL (Structured Query Language) has allowed me over time to present essential statistics and reports to let me know how I am doing for almost any stock or option trade type or strategy and summarizing performance by stock, option, month, day or year continues to be quite simple to perform.
The most significant point is how could you actually know how you are doing should you don’t keep records? You can find a stock put for your needs after which sell it off at loss, but then know that overall as a result of option premium you received for selling the PUT that really you created a profit on that trade overall. Without keeping records, you would never understand how you truly did for just about any specific complex option trade.