Options Trading JournalBefore you make your first trade, you should seriously consider constructing an options trading journal. This can be done on paper or electronically, but the main this is to do it. You should record each trade made with the date, number of contracts, your expectations for the trade, and any feelings you may have at the outset. You might even like to paste in a chart of the underlying stock, ETF or commodity. As the trade progresses, make note of how you think it is going, and your reactions to market news regarding your trade. When the trade is over, record the date, the profit or loss, and again your thoughts about the trade. As time passes and your business progresses, you will refer back to this treasure trove find a wealth of information about things you did right and things that went wrong. Take note of the latter. Begin to address the areas where you can improve your safe-option-trading business.
A sample entry might look like this: 10/19/11 sold two November 20 calls for 50 cents against 200 shares XYZ bought at 19.50. Stock in an uptrend and expect the uptrend to continue. If called next month, I stand to make $1.00 profit per share ($200) before commissions. If not called out I will get to keep $100 premium free and clear and will look to sell additional calls. 11/21/11: Called out. Maximum profit realized. Very happy with outcome. Of course, you can design this critical piece of information any way you like.
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