January 30, 2026 – Happy New Year, and welcome to a new installment of the Options Trading Series. I hope you had a peaceful Christmas break and a good start to the New Year. I certainly did; I took my family to South America, where we visited Argentina, then took an amazing cruise to the Patagonia (Southern Argentina and Chile), the Antarctic Peninsula, the Falkland Islands, and Uruguay. But now life is back to normal, and I’m back in business again. And as usual, at the beginning of the year, I publish my annual options trading strategy review. In short, it was another profitable and prosperous year. Let’s get started and look at a quick strategy summary, performance, and strategy changes and updates…
Continue reading “Options Trading Series: Part 14 – Year 2025 Review”Tag: trading
Why the Wheel Strategy Doesn’t Work – Options Series Part 12
September 17, 2024 – Welcome to another installment of my Options Trading Series. Please click here for the Options Landing Page for more details about the strategy. People frequently ask me how I deal with losses when I trade my options strategy. My approach is that a loss is water under the bridge, and I run the same strategy going forward, albeit with a slightly smaller account size. I’ve been trading my put options strategy since 2011, and this approach has served me well in several significant equity drawdowns, most recently in the 2022 bear market.
However, some of the options traders who have found my blog over the years must be big fans of the so-called “Wheel Strategy” (or “Options Wheel” or other related terms) and ask me all the time if it wouldn’t be better to take possession of the underlying, and then sell covered calls until I recover the loss. This strategy is often marketed as a great risk management tool and a surefire way to claw back losses.
I’ve previously dismissed this idea and given short and curt answers. But since the issue keeps coming up, I want to publish a more detailed post explaining why I don’t think the Wheel Strategy holds up to all the hype on the internet. Let’s take a look…
Continue reading “Why the Wheel Strategy Doesn’t Work – Options Series Part 12”Trading Options: A Primer (Options Series Part 11)
March 7, 2024 – My claim to fame in the personal finance and early retirement community is my Safe Withdrawal Rate Series, which has now grown to 60 parts. But I also have another passion: trading options to generate extra income in retirement. By popular demand, I like to update everyone on how my strategy has evolved since my last update in early 2023. Before I do that, though, I also want to reemphasize the rationale for my options trading strategy: Why does it work? How does it fit into a portfolio, both during accumulation and now in retirement? How do we dispel some of the common objections and misunderstandings? I think of it as an options trading primer.
Let’s take a look…
Continue reading “Trading Options: A Primer (Options Series Part 11)”Is a short-interest ratio above 100% really that scary? The GameStop Saga Part 2
February 22, 2021 – In late January, I wrote about my thoughts on the crazy wild ride in GameStop and some other meme stocks. Now might be a good time to do an update to talk about some of the other things I learned. For example, how a short-interest ratio of more than 100% is surely disconcerting but it’s not quite as scary as it’s often portrayed if you do your math right – which seems to be a luxury good these days!
So, here are some more of my thoughts on the 100%+ short interest, market manipulation, GameStop valuation, and more… Continue reading “Is a short-interest ratio above 100% really that scary? The GameStop Saga Part 2”
My thoughts on the GameStop volatility
Update (February 8, 2021): Well, there you have it, GameStop is back closer to reality at around $60 as of today. It lost 80+% from the peak value. Who would have guessed that?!
January 30, 2021 – Wow, what a week! I was reminded again why I prefer to be an index investor (for the most part). I don’t have to live through the wild price moves as we saw in GameStop (GME) and the other “meme stocks”. And I don’t have to worry about trading restrictions. But it was entertaining to watch the drama, stocks going up by 100+% in one day and seeing short-seller hedge funds being driven to the brink of ruin. The media certainly loved this story of David vs. Goliath; a mob of Reddit users in the “Wall Street Bets” (WSB) group vs. the powerful finance establishment! My blogging buddy Retire in Progress wrote a nice post about the GameStop Short Squeeze. But I also wanted to share some of my own thoughts. Let’s take a look…