Option Trading and Record Keeping

I often think of other people who trade options as much as I do all day. I wonder if they use the best discount brokers available in the area and more importantly how do they keep records of all their trades?

In my opinion, record keeping in the complex profession of options trading is just about the most important thing there is. How can you know if you are successful in options trading if you don’t know your profit and loss per share, per trade type, per day, per month for an entire year? For me the answer has always been a combination of 3 methods. The first method, of course, would be to use a spreadsheet to keep a running total of all the shares I own. I keep another spreadsheet to record all my expenses for each month, and this is vital to knowing the grand total of all sources of income and expenses, including business fees.

The most important tool I use for all my stock and option trading is Microsoft Access. Using the Access database is the perfect tool to record each stock or option trade. For options, I have a column that represents the number of contracts for each option trade and for options, one contract represents 100 shares. If I buy an options contract, the contract number will be negative, and if I sell, the contract number will be positive. The other columns in the table would be for the option price and the trading fee, so to calculate the total for any trading option it would be (100*Price*Contract) – Trading Fee. Using SQL (Structured Query Language) has allowed me over the years to display very important statistics and reports that let me know how I am doing for any type or stock or option trading strategy and summarize performance per share, option, month, day or year. it has been very easy to achieve.

The most important point is how can you really know how you’re doing if you don’t keep records? You might be put in a stock and then sell it at a loss, but then learn that overall, because of the option premium you received from selling the PUT option, you actually made a profit on that trade overall. Without keeping records, you would never know how you actually did for any specific complex option trade.

With any profession, record keeping is vital to knowing how you’re really doing, but with the difficult profession of options trading, keeping records is just about the most important thing you can do.