To The Moon

Chang Pengyao (Oliver) @Oliver 的期权旅途 is a seasoned investor with years of hands-on options trading experience. Starting with a five-figure portfolio and gradually building it to an eight-figure level, he has gone through multiple market cycles, mistakes and drawdowns along the way. Over time, he developed a trading framework centred on probability, pricing, position sizing and risk management.

“Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.”

Oliver quoted this line from The Art of War as the central idea behind his sharing.

He used the Chu–Han Contention as an example. Liu Bang lost repeatedly to Xiang Yu in direct battles, yet Xiang Yu was ultimately the one who lost the war. The lesson is simple:

Repeated tactical victories cannot compensate for a fundamentally flawed strategy.

Why do so many investors spend time trading options, only to conclude that they might have been better off simply buying stocks?

Why can someone make money many times in normal markets, only to give back a large portion of those gains during one extreme move?

For Oliver, the biggest risk in investing is not getting one trade wrong. It is winning many small battles, only to lose the entire account because of one mistake.

His objective is therefore not to be right on every trade. It is to build a framework that allows him to remain in the market even when a view is wrong and a trade loses money.

“First make yourself invincible, then wait for the enemy to become vulnerable.”

From common options trading traps and the idea of running an options portfolio like an insurance company, to his 2026 trading cases and risk management framework, Oliver gradually unpacked how he approaches options trading.

1. Why Most Investors Struggle With Options

When investors first discover options, the appeal seems obvious.

Options provide leverage. You can express both bullish and bearish views. Sellers can also collect option premium. So why not trade them?

Yet Oliver pointed out that many investors eventually arrive at the same conclusion:

“After trading options for a while, I might as well just buy stocks.”

So where does the problem come from?

Trap 1: Owning shares while selling Calls, or using leverage to sell Puts.

Many investors own stocks such as $英伟达(NVDA)$ or $苹果(AAPL)$ and think that selling a Call on top of the position is an easy way to earn some extra income.

But once you examine the payoff carefully, the premium collected on each trade may amount to only 1%, or even 0.5%, of the underlying notional value.

If the market makes a sharp adverse move, however, a single loss could reach 40% to 50%.

One major loss can wipe out the profits from dozens of winning trades.

The risk-reward profile can therefore become severely asymmetric.

Trap 2: The Wheel Strategy and 0DTE options.

The Wheel Strategy — selling Calls after prices rise and selling Puts after prices fall — can appear attractive because it seems possible to collect premium in almost any market.

But Oliver believes one structural weakness is that Covered Calls can cap the upside of the underlying stock during a strong bull market.

In practice, selling Calls may mean giving up part of the very move that creates most of the stock’s long-term returns — such as $英伟达(NVDA)$ rising from around US$10 to US$236, or $苹果(AAPL)$ rising from around US$100 to US$344.

You may collect small amounts of premium while missing the most explosive part of a major trend.

Trap 3: Selling options purely for “income”.

There are countless videos online describing option selling as a way to generate regular cash flow, almost like collecting rent.

But that framing ignores one important issue.

If you sell a Put, get assigned and the stock continues falling, you may end up owning a company whose fundamentals have already deteriorated.

Instead of reassessing the position, some investors refuse to sell and tell themselves:

“I’m now a long-term value investor.”

The loss then becomes progressively larger.

There is an important point here:

A strategy becoming widely popular does not necessarily make it correct.

Options are a market with strong zero-sum characteristics. What feels intuitive to the majority can sometimes be precisely where poor risk-reward decisions are concentrated.

Oliver’s view is that if your final conclusion after trading options is “I should have just bought stocks”, the problem is not necessarily options themselves.

It may be the way they were used.

2. What Is the Real Advantage of Options?

If these common approaches all have limitations, are options still worth trading?

“The problem is not options. The problem is using a stock-investing mindset to trade options.”

Oliver believes options provide three additional dimensions that stocks alone do not.

Dimension 1: Accessing a wider range of asset classes.

Assets such as gold, bonds, crude oil and silver may appear unattractive to some investors because their underlying long-term returns can be lower than equities.

Options change that equation.

Even relatively low-volatility assets can create attractive trading opportunities through options, including during periods when the underlying price is largely range-bound.

Dimension 2: Trading volatility — in other words, trading market sentiment.

Options are not only instruments for expressing direction.

They also allow investors to trade sentiment itself.

When markets become extremely fearful or euphoric, implied volatility can rise sharply. For an option seller, such periods may offer opportunities to collect unusually high risk premiums.

Dimension 3: Non-linear leverage and capital efficiency.

Oliver used $英伟达(NVDA)$ as an example.

A Put with a strike price of US$230 expiring on 18 September could generate approximately US$850 in premium when sold.

Based on a margin requirement of US$7,181, the annualised return would be around 205.7%.

Even if the calculation were based on the full cash amount required to take assignment, the annualised return would still be approximately 64.2% — substantially higher than the roughly 20% long-term annualised return generally associated with even exceptional equity investors.

Traditional stock investing earns from the long-term growth of businesses.

Option sellers, by contrast, can earn from time decay and the risk premium paid by the counterparty.

These are fundamentally different sources of return.

The key is not to predict direction perfectly. It is to identify mispricing in the market and use the passage of time to your advantage.

3. Run an Options Portfolio Like an Insurance Company

When investors see an example showing a 205.7% annualised return, the obvious question is:

If options are so capital-efficient, why not simply increase the position size?

Oliver’s “insurance company” framework is his answer to that question.

“Being an option seller is essentially like running an insurance company.”

Collecting option premium is similar to an insurer collecting premiums from policyholders.

But how does a well-run insurance company survive?

It does not commit all its capital to one policy.

Instead, it relies on four key principles.

① Pricing: The more euphoric the market, the more expensive the “insurance premium”.

Oliver cited examples such as SpaceX-related excitement, gold during a bull market, crude oil during US–Iran tensions, and earlier cryptocurrency rallies.

When an asset becomes extremely popular, its pricing can become detached from normal conditions.

When Korean retail investors aggressively buy leveraged storage-related ETFs, or social media becomes filled with posts about taking maximum leverage on SK Hynix, that may be the moment when the market is willing to pay an exceptionally high “insurance premium”.

② Diversification through low correlation

This was one of the most important concepts in Oliver’s entire sharing.

Using an asset-correlation chart, he explained that the $标普500(.SPX)$ has only around -0.07 correlation with bonds and very little correlation with gold.

If a portfolio contains exposure across US equities, bonds, gold, crude oil, emerging markets and other asset classes, a major problem in one asset does not necessarily cause everything else to fall at the same time.

The remaining positions can provide liquidity and flexibility.

Correlation analysis can also go much deeper — large caps versus small caps, different sectors, or even long and short exposures within the same market.

Oliver explained:

“The more uncorrelated instruments you can find, the more opportunities you can trade safely. If each position represents only 10% to 20% of the portfolio, even if something goes wrong, you may lose only that 10% to 20%. You still have 80% to 90% of your capital available to take advantage of opportunities.”

③ Reserves: Always maintain sufficient liquidity for extreme market conditions and potential margin calls.

Capital that is not currently deployed is not necessarily wasted capital.

It is part of the portfolio’s risk-management infrastructure.

④ Claims-paying ability: In the worst-case scenario, will the portfolio be forced into liquidation?

This needs to be answered clearly and quantitatively before entering each trade.

Oliver defines the “ultimate risk” of an option position as the amount of capital that may need to be deployed if assignment occurs — not merely the option premium received or paid.

That amount must remain within the investor’s actual risk capacity.

There is another important blind spot that many investors overlook:

You do not need to be right 100% of the time.

A well-constructed options portfolio can tolerate some incorrect views.

Even if two or three strategies are losing money, disciplined position sizing and sufficiently low correlation between positions can allow the overall portfolio to remain profitable.

During his review of the first half of 2026, Oliver acknowledged that several of his own strategies did not perform as expected.

Crude oil, for example, was much more volatile than anticipated, and implied volatility rebounded after appearing to peak.

But because the portfolio was sufficiently diversified across uncorrelated exposures, the positions did not all go wrong at the same time.

The overall portfolio still generated a positive return.

4. Reviewing Oliver’s Trades in the First Half of 2026

Beyond the theoretical framework, Oliver shared several real trades from 2026 to explain how he looks for market mispricing.

Trade 1: Shorting a leveraged Korean storage-sector ETF — QRU

In June 2026, Korean retail investors became highly enthusiastic about storage-related stocks, while the Korean government introduced measures to reduce leverage.

Oliver pointed out that similar policy signals also appeared during China’s previous stock-market boom-and-bust cycles.

QRU’s implied volatility surged to unusually high levels, with annualised returns from selling out-of-the-money Calls reaching around 300% to 500%.

Oliver stressed that he did not enter the trade because he could predict with certainty that storage stocks would fall.

Whether storage semiconductors were genuinely cyclical was not the central question.

What mattered was that price, sentiment and policy signals were all pointing towards an extremely euphoric market — and extreme euphoria is difficult to sustain indefinitely.

He also explained why he preferred this instrument over Micron.

The objective was to:

“Find the least rational counterparty.”

In his view, retail investors willing to chase a leveraged ETF represented a less rational counterparty than investors trading a conventional stock.

Once sentiment normalised, the trade became profitable.

Trade 2: Shorting an overheated crude oil market

Geopolitical tensions pushed crude oil’s historical volatility to a temporary extreme.

But crude oil also has a strong history of mean reversion.

Wars, blockades and supply shocks have occurred repeatedly throughout history, yet eventually countries return to negotiation because lower energy prices generally benefit the global economy over the long run.

Oliver acknowledged:

“Shorting crude oil was not smooth all the way.”

The position experienced more volatility than expected, and implied volatility rebounded even after appearing to peak.

But disciplined position sizing kept the trade survivable.

As he put it:

“Finding an irrational counterparty gets you halfway there. The other half is controlling your position size.”

Trade 3: Shorting the retail-driven silver frenzy

Earlier in the year, the market became increasingly excited by the narrative that AI-related demand would create a structural shortage of silver.

The Chicago Mercantile Exchange raised silver margin requirements six consecutive times — a very clear signal that the exchange itself was attempting to cool speculative activity.

Oliver also noted that similar silver bull markets have appeared several times historically and were ultimately followed by substantial price corrections.

He therefore viewed the situation as another environment in which option sellers could evaluate whether the market was offering an unusually high risk premium.

By taking the other side of euphoric retail positioning, the trade benefited when sentiment eventually cooled.

Trade 4: Shorting SanDisk options

$闪迪(SNDK)$ implied volatility at one point reached around 150%, reflecting extremely elevated market expectations.

As implied volatility fell, option prices dropped significantly.

Even though the underlying stock declined by only a fraction of that amount, the options position generated a meaningful profit.

This illustrates one of the key characteristics of short-option strategies:

You can potentially profit not only from price mean reversion, but also from sentiment and volatility mean reversion.

The common feature across all four trades was clear: obvious pricing distortions, unusually high risk premiums and extreme retail euphoria.

Oliver describes a high-conviction setup as one where:

• position size remains around 10% to 20%,

• the option is sold at a reasonable level, and

• the counterparty is behaving irrationally.

Leveraged ETFs suffer from structural decay over time, while euphoric sentiment itself is difficult to sustain indefinitely.

5. Why Does Oliver Avoid Vertical Spreads?

During the Q&A, one participant asked:

“Do you still trade Vertical Spreads like before?”

Oliver’s answer was direct:

“Vertical Spreads are the enemy of time.”

His reasoning is that a Vertical Spread requires the investor to buy a protective option.

That protective leg continuously loses time value.

If the underlying stock trades sideways, the short leg may not generate sufficient profit, while the long protection leg continues to decay.

As a result:

Time is no longer fully working in your favour. Part of the position is being eroded by it.

Oliver added that high-return Vertical Spread strategies tend to be more suitable for high-frequency or intraday trading.

That often requires constant monitoring.

As he joked:

“I think most people still need to sleep.”

For the average investor, he therefore considers medium- to longer-term positioning more practical.

In his framework, a genuine insurance company would not rely primarily on spreads to cap every possible payout.

Instead, it manages risk through accurate pricing, diversification and sufficient reserves.

6. How Do You Know When Retail Euphoria Has Reached an Extreme?

This was one of the questions investors were most interested in.

Oliver highlighted four areas to monitor.

① Policy signals

Government deleveraging measures and repeated increases in exchange margin requirements are examples of explicit “cooling” signals.

They indicate that regulators or market operators themselves have begun to recognise excessive speculation.

② Social media sentiment

When social platforms become filled with messages such as:

“All-in with maximum leverage on this stock”

or

“Get rich overnight”

retail positioning may have reached an extreme.

Oliver summarised this provocatively as:

“Retail investors are always wrong.”

His point was not intended as ridicule.

Rather, it refers to a recurring observation in behavioural finance: when one-sided speculative positioning becomes extremely crowded, the collective behaviour of retail investors can itself become a contrarian indicator.

③ Implied volatility

Compare current implied volatility with the asset’s historical volatility range.

If IV has expanded several times over — or even reached triple-digit levels — the option market may be pricing an unusually large risk premium.

Oliver suggested a simple approach:

Compare current IV with the asset’s own historical volatility. If it is dramatically higher than normal, you know pricing has become unusually expensive.

④ Fundamental valuation

Using Micron as an example, Oliver argued that when its share price was near its highs, much of the expected growth over the following two to three years had already been reflected in the valuation.

That left less room for further upside without another major improvement in expectations.

Oliver also specifically commented that he would not recommend Hong Kong-listed Callable Bull/Bear Contracts (CBBCs).

In his words, they are essentially:

“A stripped-down version of options”

with a structure that can be relatively unfavourable to buyers.

7. Can Smaller Accounts Use Option-Selling Strategies?

This is a common concern:

“If I do not have several million dollars, how can I diversify across dozens of uncorrelated assets?”

Oliver’s answer was that smaller accounts can still use option-selling strategies.

Selling a Call expresses bearish exposure. Selling a Put expresses bullish exposure. The underlying principle does not depend on portfolio size.

However, he also acknowledged the main limitation:

“The biggest difficulty for a small account is that you have less room for error because you cannot diversify sufficiently.”

That means smaller accounts need even more patience.

The objective should not be to trade frequently.

Instead, investors may need to wait for opportunities where the risk premium is unusually high and the setup is especially attractive.

Oliver put it this way:

“A small account needs exceptional opportunities in order to become a large account.”

This has little to do with whether someone trades as an option buyer or seller.

The key is the quality of the opportunity, not the number of trades.

Staying in cash most of the time and waiting for the market to offer an exceptional opportunity is not inactivity. It is an active decision to participate only when the odds are attractive enough.

8. What Should You Do After a Short Put Is Assigned?

Oliver pointed out that assignment after selling a Put is extremely common and should not automatically be viewed as a failure or an unexpected event.

He outlined three principles.

First, before entering the trade, ask one question:

If the share price falls below the strike price, would I still be willing to own the underlying shares at that price?

If the answer is no, you should probably not sell the Put in the first place.

During the Q&A, Oliver stressed:

“Before selling a Put, you need to make sure you are comfortable with the underlying and the potential outcome.”

Second, reassess the fundamentals after assignment.

If the company’s fundamentals have deteriorated, the position should be dealt with decisively.

Do not turn a losing trade into a “long-term investment” simply because you are unwilling to realise the loss.

Third, position sizing determines the final outcome.

Oliver suggested limiting exposure to any single category of options trade to around 10% to 20% of total capital.

Importantly, this refers to the capital that would need to be deployed if assignment occurs — not merely the option premium involved.

Even if the underlying continues falling after assignment, having 80% to 90% of the portfolio still available gives the investor flexibility to manage the position or potentially deploy capital at more attractive prices.

9. Distinguishing Positive- and Negative-Expectancy Trading Models

Oliver emphasised that investors should be able to distinguish between trading approaches with positive long-term expected value and those with structurally negative expected value.

Trading models he believes have negative long-term expectancy include:

• Intraday trading: If directional accuracy is approximately 50%, transaction costs and slippage steadily erode returns over time. Oliver said he has personally not encountered anyone who consistently generated long-term profits purely through day trading.

• Unsophisticated naked option selling: Simply collecting premium without a systematic risk-management framework can create a severely asymmetric payoff profile.

• The Wheel Strategy: In his view, consistently applying the strategy over long periods can lead investors to cap major upside trends while remaining exposed to asymmetric downside risk.

Trading models with positive long-term expectancy tend to share the following characteristics:

• Entering when market sentiment is extreme and implied volatility appears substantially overpriced

• Limiting exposure to around 10% to 20% of total capital

• Maintaining low or negative correlation among portfolio exposures

• Calculating the maximum potential loss in advance and confirming that the portfolio can absorb it

“Do not maximise the return of a single trade. Maximise sustainable long-term compounding.”

10. The Five Lines of Defence in Risk Management

Oliver summarised his options risk-management framework through five lines of defence.

① Position sizing

No individual trade should threaten the survival of the overall account.

Oliver suggested a 10% to 20% maximum exposure to any single category.

Even if one trade suffers a total loss, the remaining 80% to 90% of the portfolio can continue operating.

Some investors may ask:

“If US$100 of capital lets me control US$400 of exposure, why shouldn’t I?”

In theory, you can — if you can guarantee that the portfolio will never face a forced liquidation.

But insurance companies eventually encounter events that exceed normal expectations.

An institution that consistently operates without enough capital reserves will eventually fail.

② Leverage management

Margin requirement is not the same as genuine risk capacity.

Just because a broker allows a position does not mean the account can safely absorb its worst-case outcome.

③ Tail-risk management

Investors need to consider Gamma, Vega and liquidity risk during extreme market moves.

Oliver referred to an earlier market sell-off in which NVIDIA fell from around US$180 to US$80.

Many traders were positioned too aggressively and lost the flexibility to adjust once the market moved sharply against them.

④ Liquidity reserves

Always retain capital that can be redeployed.

Even under a severe market scenario, the portfolio should still have room to adjust positions and respond to new opportunities.

⑤ Trading discipline

Define the conditions for stopping out, rolling, reducing exposure or exiting before the position becomes emotionally difficult to manage.

Then follow those rules consistently.

“The skilful warrior first places himself beyond the possibility of defeat, and then waits for an opportunity to defeat the enemy.”

The objective is to put yourself in a position where one adverse event cannot knock you out of the market — and only then wait patiently for opportunities worth taking.

Oliver also shared that his portfolio currently has no long exposure to technology stocks.

He is waiting for the next major technology-sector correction — something similar to NVIDIA falling from US$180 to US$80.

Because he normally keeps substantial capital undeployed, he expects to have 80% to 90% of his capital and risk capacity available when such opportunities appear.

This is what “win first, then fight” means in practice.

Staying out of the market does not mean there are no opportunities.

It means preserving capital so that when a truly significant opportunity appears, you are still in the game — and still have capital to deploy.

Conclusion: Four Things Options Trading Is “Not”

Returning to the central idea of “win first, then fight”, Oliver summarised his options philosophy through four things options trading is not.

Options trading is not about predicting the future. It is about managing probabilities.

Instead of simply asking:

“Will the stock go up or down?”

the more important questions are:

How likely is this outcome? How is the market pricing that probability? What option structure best expresses the view? And if I am wrong, what is the maximum amount I can lose?

Options trading is not about winning every trade. It is about maintaining positive long-term expectancy.

Oliver repeatedly emphasised that individual trades can be wrong.

Some strategies can lose money.

The objective is to use position sizing and low correlation to prevent several risks from materialising simultaneously and turning one mistake into an account-level loss.

Options trading is not about maximising the return of one trade. It is about maximising sustainable compounding.

Leverage can make the potential return of a single trade look extremely attractive.

But if that leverage simultaneously puts the account in a position where it cannot survive being wrong, the headline return is meaningless.

Instead of asking:

“How much can I make from this trade?”

Oliver focuses more on:

Can this approach be repeated over the long term? And if an extreme market event occurs, will I still have the capital to continue participating?

Options trading is not about trading first and thinking about risk later. It is about putting yourself in an “unbeatable” position before entering the trade.

You do not need to trade frequently.

Only when market risk premiums are high, pricing is unusually attractive and the opportunity is sufficiently clear should capital be deployed — and even then, position sizes should remain controlled.

At other times, preserving cash and liquidity is itself part of the strategy.

So “win first, then fight” does not mean finding a strategy that can never lose.

It means:

Make sure one mistake cannot force you out of the market, then wait for opportunities that are genuinely worth the risk.

If the setup is unclear, wait.
If the pricing is not attractive enough, do nothing.
And when a genuine opportunity finally appears, make sure you still have the capital to act.

That is what Oliver means by:

“Win first, then fight.”

🗣️ Livestream language: Mandarin

🎥 Watch the full livestream replay: https://tigr.link/9ASOVY

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*The livestream content, guest views and trading examples are provided for investment education and discussion purposes only and do not constitute investment advice. Options and leveraged products involve significant risk of loss. Prices and returns may rise or fall, and investors may lose all of the capital invested. Strategies, position sizes and capital allocations mentioned in this article are examples used for educational purposes and may not be suitable for all investors. Before trading, investors should fully understand the product features, contract specifications, maximum potential loss and their own risk tolerance. Past performance is not indicative of future results.