Educational use only — not investment advice. See full disclaimer in README.md.
A single number that grades a setup before you place it. Its job is to remove emotion and force consistency — you score the trade objectively, and a hard cutoff decides go/no-go. A surprising number of bad trades quietly disappear when you require yourself to score the setup first. This complements the pass/fail pre-flight checklist: the checklist is a binary safety gate (any ✗ = stop); the scorecard grades quality among trades that already pass safety.
The rule: score every candidate. Below 70 → NO TRADE. No exceptions, no “but I have a good feeling.”
The scorecard
Six categories, 100 points. Each maps to a section of the manual so the score is grounded, not arbitrary.
| # | Category | Max | What earns the points | Source |
|---|---|---|---|---|
| 1 | Clear edge | 20 | You can name one edge (direction / volatility / theta / event) in a sentence | 07 §5 · 02 |
| 2 | Catalyst / reason to move | 15 | A real reason this name moves now (earnings, event, breakout, RS) | 01 · 07 |
| 3 | IV regime fit | 20 | IVR points the right way for your structure (high→sell, low→buy) and expected-move mispricing favors you | 01 Tag 2 · 07 §3 |
| 4 | Liquidity & execution | 15 | Tight bid/ask, healthy OI/volume, you’ll work a limit at mid | 05 D |
| 5 | Risk / reward & defined risk | 15 | Credit ≥ ⅓ width (verticals) / sane debit; risk defined or properly stressed; positive expected value | 03 · 05 E |
| 6 | Market & portfolio alignment | 15 | Trade agrees with the broad-market read; fits your net delta/vega and concentration limits | 01 · ref-portfolio-greeks.md |
| TOTAL | 100 |
Scoring each category
Score each as full / partial / zero (don’t overthink the fractions):
| Category | Full | Partial | Zero |
|---|---|---|---|
| 1 Edge (20) | 20 — one crisp edge, high conviction | 10 — edge exists but soft/mixed | 0 — can’t name one → auto NO TRADE |
| 2 Catalyst (15) | 15 — clear, dated catalyst or strong RS | 8 — mild/technical only | 0 — “it just looks good” |
| 3 IV fit (20) | 20 — IVR right for structure and move mispriced your way | 10 — IVR ok but move ~fairly priced | 0 — IVR fights your structure (e.g., buying in high IVR) |
| 4 Liquidity (15) | 15 — tight, deep, index/large-cap | 8 — tradeable but wider | 0 — wide/thin → auto NO TRADE |
| 5 Risk/reward (15) | 15 — defined risk, good credit/debit, +EV | 8 — acceptable but mediocre R:R | 0 — poor R:R or undefined & unstressed |
| 6 Alignment (15) | 15 — with the tape, within all portfolio limits | 8 — neutral to the tape | 0 — fights the tape or breaches a limit |
The grade
90–100 → A trade — your best setups; full size (within risk rules)
80–89 → B trade — solid; normal size
70–79 → C trade — marginal; size DOWN or wait for improvement
below 70 → NO TRADE — stand down. Log it and move on.
Hard floors (any one of these = NO TRADE regardless of total): can’t name an edge (cat 1 = 0) · liquidity fails (cat 4 = 0) · the pre-flight checklist has any ✗ · the position breaches a sizing/portfolio limit. A high score never overrides a safety failure.
Printable scorecard (copy this)
═══════════════════════════════════════════════════════════
TRADE-QUALITY SCORECARD Date: ______ Ticker: ______
───────────────────────────────────────────────────────────
Strategy: __________________ Thesis (1 line): ____________________
1. CLEAR EDGE [ /20] edge = direction/vol/theta/event: ____
2. CATALYST / REASON [ /15] what: ____________________
3. IV REGIME FIT [ /20] IVR ___ · move mispriced my way? Y/N
4. LIQUIDITY & EXECUTION [ /15] bid/ask ___ OI/vol ok? Y/N
5. RISK / REWARD [ /15] max loss $___ credit/width ___ +EV? Y/N
6. MARKET & PORTFOLIO FIT [ /15] with tape? Y/N · within Δ/vega/conc limits? Y/N
───────────────────────────────────────────────────────────
TOTAL [ /100] GRADE: [ A / B / C / NO TRADE ]
Hard-floor check (any NO → NO TRADE):
[ ] Edge nameable [ ] Liquidity ok [ ] Pre-flight all ✓ [ ] Within limits
DECISION: ☐ EXECUTE (size: ____) ☐ NO TRADE
═══════════════════════════════════════════════════════════
How it plugs into the daily loop
- Run 01 → 07 → 02 → 03 → 05 as normal.
- Then score the finished trade idea here. The scorecard pulls together what those steps already produced — it’s a final, objective gate, not extra analysis.
- ≥70 and all hard floors pass → execute at the graded size. <70 → log it as a no-trade (still worth journaling — pattern-spotting on your rejects is valuable).
Why a number works: “this looks good” is unfalsifiable and drifts with your mood. “This is a 64” is a decision. Over months, your journal (journal-and-review.md) will also show whether your A trades actually outperform your C trades — if they don’t, your scoring weights need tuning, which is itself a useful finding.
Worked example
XLF bull put spread (from the 07 worked example). Edge = sell rich premium into a bullish lean → 20. Catalyst = financials leading + clean breakout → 15. IVR 55 (high, right for selling) and you expect a smaller move than implied → 20. SPY-sector ETF, tight markets → liquidity 15. 5-wide spread for $1.65 credit (>⅓ width), defined risk, +EV → 15. With the bullish tape, within limits → alignment 15. Total = 100 → A trade, full size.
Contrast — the AAPL idea: no catalyst (8→ really 0 for “looks good”), IVR 22 but you’re trying to sell (IVR fights you → 0 on cat 3), edge soft (10). Even before finishing, cat-3 = 0 fights the structure and the total lands well under 70 → NO TRADE. The scorecard killed it objectively, exactly as it should.
Next: graded ≥70 and safe? → place it per 05 and log per journal-and-review.md.
Power and Pelf 