Almost a year ago, I got really into option trading. After reading a lot of content on different sites, I felt ready for my first trade. The first 6 month, I only tipped my feet in the water. I had the luck to experience a nice market correction in Aug 2015. It learned me a lot about rolling a loosing trade. Probably the best lesson when you do not want to get a signed the stock.
The core of my option strategy is to earn extra income. Not to get assigned the stock or to be called away. I am prepared and ready for that moment when it happens. I will do everything possible to avoid this.
I hold a logbook of all my trades. This has some valuable lessons already in there. One of these lessons is to be diversified in puts and calls. That way, I can make a small profit no matter what. I also learned that uncorrelated assets work very well. I will post on that later.
On a lazy Sunday afternoon, I stated to play with my travelog and came up with some nice facts and figures about my trading.
The first one is about the profit per trade. I first let you look at the graph. What would be your thoughts?
To me the following stands out:
- Most of my trade generate between 15 and 30 profit. It might not be a lot. Remember that I trade small and I trade often. (As learned on Tastytrade). My option portfolio is part of my playmoney and does not allow me to trade a lot of contracts at once if I want to stay diversified in the underlying ETFs I trade.
- My losses are very limited. I actually have only 2 loosing trades. The amounts are quite big compared to my normal win. Only 2 losses?!? Am I a genius? NO WAY. When a trade goes against me, I prefer to fix the trade by rolling myself out of it, no matter what time or capital this might take. I just hate loosing. Going forward, this is clearly an attention point for me.I do belief this approach has limits to make me grow further.
- There a few “big” wins on the chart as well. This is where I bended the rules of how much downside protection I wanted. Basically none… These trades were in the gold and silver space. I am very bullish and that reflects in my trades. Not insight, just “gambling”.
What does your profit histogram looks like?