The First Step

The Beginning

This is a blog about stock option investing. I will take you down the journey of building analytics to understand how to improve return on investment in stocks, options, bonds, and other investment instruments. This blog is not a blog about the basics of Python or R, it is focused on building tools to help improve visibility and understand asset performance and how to improve returns.

Selling stock options is one investing instrument that can generate cash. The question is can you make a profit or generate cash flow over the long term. My experience with options is very limited, but this blog is my journey to develop methods and tools to measure and improve returns. My experience so far has been a zero sum game or a loss of value when I trade stock options.

To set the stage, I pulled some data from my trading platform to show the return for 2019. I will try a six sigma approach to measure and improve performance. Problem statement: Can you generate consistent cash flow or returns from selling stock options on a small account? We will define a small account as less than $3,000 dollars. Most experts say that less than $5,000 is difficult to keep position size low and risk low in an account this size therefore generating returns is difficult.

I currently use TD Ameritrade, both the web platform and Thinkorswim. The nice thing about this platform is the Thinkorswim team does a great job of answering questions and providing training. They will work one-on-one with you to set-up your screens and help with questions about the functionality of the platform. Just go online and search TD Ameritrade, give them a call and they will help you get started. Go ahead and take the first step in setting up your own trading environment!

The chart above is the profit and loss for each trade plotted over time and the orange line is cumulative over time.  Overall I have a loss $200 this year trading a lot of options not a great result. Not great results let's see if it can be improved.