The Problem
I don’t shy away from my dark history: before options, I did 100x leverage crypto contracts, blew up forex accounts on MT5, and zeroed out on-chain trades — losing somewhere around 40,000 to 50,000 RMB in total.
Back then, my mindset was the classic “get rich quick” type: one trade 10x → another 10x → financial freedom. What actually happened? I hit a few doubles, but blew up far more often. In the end, it wasn’t any single catastrophic loss that wiped me out — it was death by a thousand cuts: refusing to take profits, holding through losses, adding to losers, watching them drop further, getting force-liquidated.
Then I discovered options. Or rather, options “restricted” me — expiration dates, margin requirements, no 24-hour trading. Those restrictions, to me, became guardrails.
My Thinking
After more than a year of selling options, my account has never doubled. But one thing has definitely changed: I am no longer anxious.
With contracts, I used to wake up in the middle of the night and immediately check my phone — had I been liquidated? With options, I sleep through the night. Because I know:
- My CSP strike is a price I genuinely want to own shares at
- My max loss is locked in the moment I open the trade
- Theta is working for me every single second
- Even if I get assigned, the shares I receive are in companies I’ve researched
This isn’t a victory of strategy. It’s a transformation of mindset.
Here’s a comparison table:
| Chasing High Returns | Chasing Stable Cash Flow | |
|---|---|---|
| Mindset | Anxious, glued to screens, FOMO | Calm, systematic, sleep through the night |
| Decision frequency | High frequency, emotional | Low frequency, rules-based |
| Error tolerance | Near zero | Mistakes are allowed, time to correct them |
| Long-term outcome | Boom and bust → likely zero | Controlled swings → likely compounding |
| Sustainability | Unsustainable | Can do this for a lifetime |
Trading Insight
The core of compounding isn’t the rate of return — it’s “uninterrupted continuity.”
Make 50% annualized for one year, then lose it all the next — your true annualized return is -25%. Make 15% every year for a decade — your total return is 300%.
This isn’t a math problem. It’s a psychology problem. Far fewer people can sustain 15% than can hit 50% — not because 15% is harder, but because the people chasing 50% don’t survive year two.
What options mean to me isn’t getting rich quick. They’ve given me a system I can run as an ongoing operation:
- Cash inflows every month
- Losses are contained
- Strategy is repeatable
- Mindset is stable
Those four things are worth more than any moonshot.
Practical Advice
- First, survive year one: Your first-year goal isn’t how much you make — it’s not blowing up. Survive, and you earn the right to talk about compounding.
- Set your target one notch lower: Think you can make 20%? Set your target at 12%. Anything above becomes a bonus, and your entire psychology shifts.
- Collect a monthly “salary,” not a “bonus”: Use CSP + CC to build a machine that generates monthly cash inflows — don’t bet on a single move.
- Don’t compare your returns to others: Someone’s flexing an 80% annual return — you have no idea what risk they took or whether they’ll still be around next year. Run your own system. Time will deliver the answer.
Trading Insights #005 · To be continued