You ever been really annoyed with yourself?   There is an excuse of course - not having a check list.   Well now I have one. 

I bought a call instead of a put today on IBM.  Everything else was fine - right stock, expiration date, strike price and number of options.  But I didn't verify the call/put box was set correctly. It was set to Call. 

I saw price action for a couple of minutes that tumbled to a lower low and my numbers were in the red so something was wrong!  I had lost 12% of the option price.  Sold then rebought as a put to get right back in.  You can get angry later at yourself.  But you can't turn the clock back.   Take action and get it done.   

Now I have a small piece of paper on my monitor with 5 items for my pre-buy option check list. 

1.Stock (many stocks have similar ticker symbols so verifying its correct is a vital step. 

2. Expiration date.  Checking the day as well as the month is important. 

3. Strike price:  if I mess up the strike I mess up the whole profitability of the trade.  A profit at one strike price can be a loss at another. 

4. Call or Put:  this one seems so obvious, but its a simple either / or selector.  It defaults, in my platform, to Call.   Pity it doesn't default to a third 'un-selected' box where you have to make a positive selection, but all the drop downs default to something so this is on us as traders. 

5. Amount:  this is huge.  My system defaults to 10!  It should default to 0 or 1.  So I have to manually change the number to 1 or 2.  10 can be a total collapse if I had the shares exercised against me that I had to buy.  I estimate my liabilty to verify my cash reserves could cover my liability if needed so in affect I am trading 'cash covered' options. 

I'm a check list guy.  I kicked myself for not having a simple check list in front of me.  Won't happen again! 

Martin