Damocles Weekly Trade Journal

The key component of Project Management.

Preparation

Knowledge and planning are crucial for any project.

Implementation

Test your knowledge, build an inventory, follow your dreams. After years of preparation and planning, it’s time to make it happen.

Management

Once the order has been accepted, then the real work begins.


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Let’s Make It Happen.

PIM: Preparation, Implementation, and Management are the three keys to any successful project. Proper implementation of PIM is essential if I want to be a professional Options Trader.

This PIM page will be an evolution. I anticipate that this task will be a long-term development of a comprehensive list of Options guidelines – as I have come about to see them.


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Goal.

Setup and maintain a consistent monthly “paycheck” from my Options Trading activity. For the first year of 2020, the monthly pay goal will be $250, but with the primary focus of establishing and maintaining a stable Return on Capital (ROC) that will allow me to scale up or down for future years.


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PIM

Preparation, Implementation, Management

Preparation:

Tee up, line up, swing – to use a golf analogy.

Long term

  1. Continuing education
    • Paper-trade new Option strategies
    • Read and support my fellow Option bloggers
    • Weekly webinars
  2. Selecting a Broker
  3. Continual four-six month market trends analysis
  4. Underlining Stock/ETF investigations
  5. Set and maintain Trading Account Budget
    • Keeping a P&L (Profit & Loss) statement current
  6. Set then tweak a trading schedule
  7. Actively develop my PIM page

Planning for the upcoming week(s).

  • Be current with market news and sentiment
  • Be aware of current market angst according to the VIX
  • Selection and stage of possible Spreads

Set and Confirm Entry Rules

  • Don’t make ANY trade decisions before 10:00 AM Monday.

Identify Exit Rules

  • If the expiration is more than one week out
    • If the percent of profit achieve > 85% then close the trade early
  • If the expiration is less than one week out
    • If Prob-OTM > 70% then let it ride to the end
    • If Prob-Touch > 50% consider closing early for a loss
    • If more than 50% dollar loss, close early or consider rolling.
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Implementation

Implementation should be nothing more than putting this week’s planned trades into motion.

  • Follow the set trading schedule
  • Be mindful of market sentiment when following Entry Rules
  • Diligently log all new positions
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Management

A crucial part of Options Management is to keep our eyes open for opportunities to do better. Maintaining this awareness is called Continuous Improvement. CI is an ongoing effort to improve our trading process. Using CI, I am looking for either the incremental improvement over time or breakthrough improvement.

  • Watch the current position direction and be prepared to execute an exit if required.
    • Vertical Bull Put Credit Spreads Exit Rules:
      • Close when position achieved > 90% of the expected profit. If the expiration is within two or three days, consider letting the position expire worthless.
      • If short strike premium falls below $.05, consider closing the short strike and let the long strike ride.
  • Maintain an accurate trading log.
  • Keep a trading journal (this blog) up to date and accurate
  • Understand and document trade failures (learn from my failures)
  • Always be aware of general market prognosticators opinions

 

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