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

In my opinion, record keeping in the complex profession of options trading is just about the most important thing there is. How can you tell 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 a whole 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 of my expenses for each month, and this is vital for a 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 every 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 trade fee, so to calculate the total for any trade option it would be (100*Price*Contract) – Trade Fee. The use of 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 stock or option type or trading strategy and summarize the performance per share, option, month, day or year. It has been very easy to achieve.

The bigger point is how can you really know how you’re doing if you don’t keep records? You might get a stock put on you and then sell it at a loss, but then you know that overall because of the option premium you received for 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.