It's a Good Time to Review

If you are an option trader like me, you are not a big fan of earnings season. The reason is simple: I do not like to hold positions over an earnings announcement. All trading is speculative, but to me it seems that holding a position over earnings is “extra” speculative. So, what is an options trader to do? The simple answer is to review his or her trades.

This should absolutely be done year-round, but many of us do not do it enough. Here is the excuse you need to get started. I know you might have procrastinated writing that trading plan for a long time, but I’m hoping you have finally completed it. This is an integral part of your trading plan and putting it off is not doing you any favors.

The procedure is simple. Take some screenshots of the charts and option chain when the trade is initiated. Then take a few throughout the trade and of course when the trade is exited. Did the trade work out as planned or did you do something that was not planned? Was it a bad trade but it still profited? These are just a few of the questions that you might be asking yourself as you review your trades postmortem. Trust me there are hundreds!

Lastly, do this when the market is closed so your full attention can be on the review and not on the active market. If you do this on a regular basis and not just during earnings season, I promise you that you will put yourself in a better position going forward.

John Kmiecik, Market Taker Mentoring

Trader Education