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đ ď¸ Rethinking the process after a major loss
The week of May 4â8 turned into a painful but, in some ways, necessary experience for me. After a long stretch of relatively calm and systematic trades, one position in Micron Technology Inc (MU) closed at maximum loss and effectively wiped out a large portion of the gains accumulated over the previous months.
I donât want to turn this article into a detailed breakdown of that specific trade. Situations like this are inevitable when you work with short premium and weekly credit spreads. What matters much more is understanding how I gradually arrived at this point, where exactly my process started drifting away from its original structure, and what I plan to change moving forward.
Where the system actually started breaking down
When you trade 10-delta Bear Call Spreads, you accept the nature of the structure from the very beginning. Most of the time, the market never reaches your short strikes, theta works in your favor, and time decay outpaces price movement. Thatâs exactly why these strategies can look incredibly stable, especially over dozens of trades.
But thereâs a subtle psychological problem built into that stability. After a long enough streak of smooth outcomes, your perception of risk begins to change. Especially when several previous trades survived uncomfortable situations and still ended up as winners.
Originally, my system was never based on the simple idea of âthis stock is overboughtâ. The foundation was different. I was looking for actual signs of momentum exhaustion through specific reversal patterns â bearish engulfings, evening stars, failed breakouts, dark cloud cover formations, and similar setups. In other words, overextension by itself was never enough for me to enter a trade. I also wanted evidence that the move was beginning to lose structural strength.
Over time, I started drifting away from that principle. Not because I consciously decided to change the strategy, but because I slowly adapted the process to my own publishing and trading rhythm. I developed a habit where every week was supposed to produce a new trade. And thatâs where an important shift happened: instead of waiting for truly high-quality setups, I increasingly started looking for stocks that were simply stretched enough and offered acceptable premium.
That becomes especially dangerous in a strong bull market. Over the past several months, major indexes kept printing new highs, strong tech names continued grinding upward with very little meaningful pullback, and many trades that honestly no longer met my original standards still ended up profitable anyway. Those are exactly the kinds of environments that quietly weaken discipline, because the market starts rewarding behavior that technically shouldnât be rewarded.
In that sense, MU wasnât some bizarre outlier. If anything, it was the natural conclusion of a process that had started much earlier. I gradually began confusing simple overextension with actual reversal setups, even though those are two very different things. A stock can stay stretched far longer than feels rational, especially during aggressive momentum expansion phases. Credit spreads can create a long-lasting illusion of control right up until the market suddenly moves into the exact tail-risk scenario the strategy is designed to carry.
A limited universe â and the trap of weekly execution
Thereâs another important factor that I underestimated for a long time.
My trading universe is not âthe entire marketâ. I monitor a relatively limited group of liquid names with weekly options and meaningful premium â roughly 50 to 60 stocks out of the entire market. And the reality is that truly high-quality reversal setups simply do not appear there every single week.
Of course, you can still force a trade. You can find an extended chart, elevated RSI, high implied volatility, and convince yourself the premium looks attractive enough. But that doesnât automatically mean thereâs real edge in the setup.
At the same time, staying engaged with the market every week also had genuine benefits. Running at least one position weekly kept me closely connected to market structure. I was consistently tracking volatility, momentum, earnings reactions, sector rotation, and overall index behavior. Without that rhythm, I probably would have become much less systematic and much more random in how I observed the market.
But now I realize thereâs a major difference between participating in the market to maintain discipline and participating in the market simply because the calendar says itâs time for another trade. At some point, I started mixing those two things together.
What happens after a major loss
After a trade like this, you enter a psychological state that almost every trader probably recognizes. The immediate impulse is to make the money back quickly. Open another position. Increase size. Prove to yourself that the previous outcome was just bad luck.
And thatâs exactly where many traders completely destroy their systems, turning one controlled loss into a chain of emotional decisions.
Thatâs why Iâm consciously stepping away from live trading for now. Not because I suddenly stopped believing in options trading, and not because I think the market is âwrongâ, but because I want to reset the execution side of the process and rebuild discipline properly. Right now, my goal is not to recover losses quickly. My goal is to get back to a state where decisions are made calmly and structurally again, rather than emotionally under the pressure of wanting to repair the previous result.
And separately â about subscribers
After the MU trade, I received a lot of messages, and honestly, that was probably the hardest part of the entire experience.
Despite all the standard disclaimers about risk and the fact that nothing I post is financial advice, itâs obvious that some people were following my trades and took losses as well. Formally speaking, trading is always the responsibility of the individual participant. But when you publicly document positions, explain entry logic, publish management plans, and share trade reviews, itâs impossible to completely detach yourself from that reality emotionally.
What surprised me, though, was something else. đ¤ Most of the messages were not complaints. They were expressions of interest in continuing to follow the process moving forward. And honestly, that became one of the main reasons I decided not to shut everything down after this experience, but instead approach the next phase of the project much more seriously.
What comes next
