Track Your Gains, Losses, and Basis with Mikey’s Tracker

tl;dr: Using a tracker will help you identify your basis, winning strategies, and weaknesses. This is important if you trade covered options against your shares, especially if you wheel. You can pull my tracker from the first few months of 2019 and a clean tracker template from this post’s attachments.

Edit: DMoney (Patreon Henchman) created a new tracker that can also be found in the attachments to this post. According to DMoney:  "For the tracker don’t alter any of the cells in yellow on the wheel. For the main tracker the formulas are there but I don’t know how to set up formulas to apply automatically so you will have to copy them or adjust them as needed. If someone knows how to make them universal then that would be great. But the basic formulas are the same but you just have to choose the appropriate cell for the calculation to be accurate. For the wheel options you only need to input the information into the first few rows and then for any new strike prices or expiration dates."

What Do I Need a Tracker For?

If you are using options to help manage your share portfolio, you will benefit from tracking your gains, losses, and basis. You might not need to do this if you are a pure options player who does not use shares. But if you are reading this, chances are you use both shares and options. Keeping track of your entries, exits, and premiums are important for ensuring you are sticking to a successful options plan. Using a tracker will help you do several things that are particularly important if you are using the wheel:

Manage your basis: Your basis is your total investment into a security minus anything you’ve withdrawn or realized from it. If you buy 100 shares of SPY for $25,000 then your basis is $250/share. If you sold a cash-covered put at the $250 strike for $300 premium and get assigned, your basis is $24,700 or $247/share. This alone might be easy enough to keep in the back of your mind, but you are probably going to start selling covered calls against SPY, netting premiums and bringing down your basis. You might also run some spreads against it. Keeping track of where your basis is will help you ensure you are not entering a trade that will afford you a loss if assigned.

Identify your upper break: Opposite of the basis above which identifies your lower breakeven point, the upper break tracks the top breakeven. In the SPY situation above, your upper break is $253/share because you sold a cash-covered put at the $250 strike for $300 premium. If the stock goes above $253, you stop gaining (since you already hit max gain) and would have been better off just buying shares at $250 and holding. Tracking this number makes sure you are not consistently entering positions with options when you would be better off just buying shares.

Identify bad practices: Keeping a list of your trades can help you identify weaknesses in your approach to options. I identified a weakness once I started tracking my plays: I was not using in-the-money strikes when I expected a price decrease and thus missed out on bigger gains and failed to protect myself from loss. Identifying this weakness was only possible by analyzing my own trading patterns, and adjusting has helped me rake in more premium when I expect small pullbacks in price.

Recognize winning strategies: The inverse of the above, a tracker will help you identify your most consistently successful moves. I identified that covered options were better for me than buying calls and puts when I started tracking my trades, which is what inspired me to join Theta Gang.

What should my tracker track?

I have been using a tracker pretty consistently since 2017 (though I stopped when I started doing the $3k Challenge due to time, which was a mistake). This tracker can be downloaded in this post’s attachments. Since then, my tracker has been updated several times until I settled on the following:

Blue Line Company: The Company’s name, which is not the same as the ticker.

Basis and Upper: I adjust my basis and upper break (as described above) every time I close a trade. This is rewarding and helps me manage my wheels.

Date: The date I opened the position.

Ticker: The stock’s ticker, important because some stocks have multiple tickers for different share classes (like GOOG vs. GOOGL).

Strategy: An abbreviation for the strategy I’m using.

L/Long = Long Shares

C = Call

P = Put

CC = Covered Call

CCP = Cash-Covered Put

CDS = Call Debit Spread

And so on. This section will also identify dividend payouts.

Strike/Shares: For options, this identifies the strike price. For shares, this identifies how many shares I bought.

Entry/Avg Price: This identifies my entry price if I opened the position in one shot, or the average entry price if I opened the position piecemeal. I use green if I opened the position for a credit and red if I opened for a debit.

Close Date: The date I closed the position. If I close piecemeal, I’d make a separate listing for the opening and treat it like two different positions.

Close Price: Price at which I closed the position. I use green if I closed for a credit (receiving money when you close, as when selling shares) and red if I closed for a debit (paying money when I close, as if closing a covered call); this should not be confused with closing the position for a gain or loss.

P/L: My profit or loss on the trade. I track dividends as profits.

Remarks: Why did I open this trade? Why did I close? Did I learn anything from it? This is free space to help me keep track of my decisions so I can identify patterns in good and bad decision-making.

Any other additional considerations?

You are going to pay taxes if you have a capital gain at the end of the year. Keep in mind that your P/L is probably not adjusting for these, so you won’t be pocketing that whole gain after you’re done paying Uncle Sam. You still have to pay tax even if you reinvest the profits. This obviously does not apply to tax-advantaged accounts like a Roth IRA.

Best practice: Update your tracker ASAP after you trade. It will make it so much easier than falling behind and trying to dig through your trade history later.

This tracker does not auto-populate since I can make an excel sheet look pretty but have no idea how to use formulas. If you are good at excel, consider writing some formulas.

Disclaimer

The attached tracker is what Mikey uses to track what he feels is most important. It is not necessarily the only information that you should track for your given situation and trading strategy. Be sure to update and use your own tracker as you see fit. Consult a licensed financial adviser if you are not sure what you should track.

You can download Mikey’s tracker from early 2019 in the attachments of this post. You can also download a nice, clean template for your own use.