The journal's standard operating procedure is the fixed set of rules that governs every trade. The SOP covers the rules for trade entry, position sizing, risk management, and exit discipline. The rules are not discretionary; they are the product of the journal's lessons from five months of trades.

The rules

The SOP is organized around the trade lifecycle:

  1. Structure selection. The journal selects the structure based on the directional bias and the IV regime. The directional bias is provided by the forecast methodology published on Dependability; the IV regime is measured by the IV rank. The journal's structure selection rules are documented in the structure articles.
  1. Position sizing. The journal sizes every position to a specific percentage of NLV based on the structure's max-loss. The sizing rules are documented in the position sizing article.
  1. Risk management. The journal's risk management rules limit the portfolio's total exposure, the correlation between positions, and the drawdown. The risk management rules are documented in the risk management article.
  1. Exit discipline. The journal's exit rules specify when to close a position: at the profit target, at the stop-loss, at expiration, or early for a documented reason. The exit rules are documented in the exit discipline article.
  1. Trade logging. Every trade is recorded in the trade log with the entry, the structure, the reasoning, the adjustments, and the outcome. The trade logging rules are documented in the trade logging discipline article.

The journal's daily routine

The journal's daily routine is the sequence of steps that the journal follows each trading day:

  1. Morning review (pre-market). Review the overnight market action, the economic calendar, and the forecast. Identify the day's directional bias and the IV regime.
  1. Position review. Review the open positions against the SOP's exit rules. Close any positions that have hit the target, the stop, or the time-based exit.
  1. Trade identification. Identify new trade opportunities based on the structure selection rules. Size the positions according to the sizing rules.
  1. Trade execution. Enter the trades using limit orders at the mid-price. Record the entry in the trade log.
  1. Midday check. Review the open positions and the market action. Adjust any positions that require it according to the adjustment rules.
  1. End-of-day review. Review the day's trades, the realized P&L, and the portfolio's exposure. Update the trade log with the day's outcomes.

The journal's weekly routine

The journal's weekly routine is the sequence of steps that the journal follows each week:

  1. Weekend review. Review the week's trades, the realized P&L, and the portfolio's exposure. Compare the realized outcomes to the expected outcomes.
  1. Playbook review. Review the SOP's rules against the realized outcomes. Identify any rules that are producing consistent losses or that need to be revised.
  1. Forecast review. Review the forecast methodology's accuracy. The forecasts are reviewed against the live close on the next publication.

The journal's monthly routine

The journal's monthly routine is the sequence of steps that the journal follows each month:

  1. Monthly performance review. Review the month's realized P&L, hit rate, and expected value. Compare to the expected outcomes.
  1. Rule revision. Propose and test revisions to the SOP's rules based on the realized patterns. Update the playbook if the revision improves the expected value.
  1. Portfolio construction review. Review the portfolio's correlation, concentration, and drawdown against the risk management rules.

The role of the SOP

The SOP is the journal's defense against discretion. Every rule in the SOP exists because the journal made the mistake that the rule prevents. The journal's view is that a fixed set of rules, applied consistently, produces better outcomes than discretionary judgment applied case by case — even when the discretionary judgment is sometimes right.

About this article

Editor: Dependability Research Desk. The desk has tracked options, index-derivative structure, and daily U.S. equity markets since 2017, with a working book in SPX/XSP index options and a public trade log that records every entry, adjustment, and close.

Editorial process: Each forecast distils overnight data and primary sources (Cboe option chains, Federal Reserve releases, Treasury auctions, FRED historicals) into the worked-example frame: what the tape is saying, the mechanism behind the move, what to do this week. Forecasts are reviewed against the live close on the next publication; the track record is self-auditing on the forecasts page.

Corrections policy: When an article gets a fact wrong (wrong strike, wrong P&L, wrong expected-move calculation), we correct it inline and append a dated correction note at the top of the affected page.

Disclosure

The desk may hold the positions, options, or underlyings mentioned in a trade-log entry at the time of publication; positions are disclosed in the trade-log entry itself. Nothing on this site is investment advice.

Disclaimer. This content is published for informational and educational purposes only. Nothing here is investment advice. Trading options involves substantial risk of loss and is not appropriate for every investor. Past performance, including the journal entries on this site, does not guarantee future results. You are solely responsible for your trading decisions.