Becoming successful and profitable as an options trader takes hard work and a lot of time. If you trade options, and I assume you do, you already know this. As I like to say, management is the most important part when it comes to trading. But having a better understanding of the time required behind the scenes of options trading, and how to manage it wisely, is key too.
Trading Is a Business
I often make the comparison between someone who is starting a restaurant and someone who is trying to be a profitable trader. A person just does not open a restaurant without a written plan. Food, drinks, the interior and exterior design of the restaurant all must be well thought out before the place can open. Not having a plan would be silly and detrimental to the restaurant owner’s success. Why, then, do so many traders act in a similar manner when they trade? It just doesn’t make sense to me, and I will never understand the logic behind not having a trading plan.
Make Time to Study
Just as you would schedule a meeting, plan times to study and review options including your trades. This needs to be done when the market is closed and you can fully concentrate on your studying. When you don’t schedule your studying, you tend to make excuses, as many people do with their gym memberships. Holding yourself accountable goes a long way toward achieving success as an options trader. Make your schedule reasonable and realistic as well. For example, if you tell yourself that you will study options for six hours over the weekend, you may get tired or distracted and quit sooner than you planned. But if you set reasonable time slots, you will have a better chance of honoring your study time.
Plan for Theta
If you are serious about being successful as an options trader, you will need to study no matter whether you are a beginner or more advanced. Put that study time on your calendar as you would any meeting or appointment, and hold yourself accountable for that time period. I promise you, that theta is well spent! Happy 2024!
One Response
Agree 100% about planning, as in the adage “A failure to plan is planning to fail”. I now have a total of 56 contracts: 45 covered calls, 2 cash-covered puts, and 9 put spreads, all displayed in detail on a whiteboard behind my desk. I update the prices on Friday/COB and spend some of my weekend just staring at the board, asking “How can I maximize my rate of return?” A year ago my option trading rate was about $1100/month. In December it was $2080, and I have plenty of capital in reserve to boost that by even more. And planning to make the most of what I’ve committed has been a great help.