Are You Using Options the Right Way? Don’t Fall Into This Trap.

Beware of self-proclaimed investing experts.

A reader reminded us of this when he shared that his closest friend had recently died. The two relished markets and discussing investing. The reader wondered about our take on an investing personality who suffered a big loss trading options—around the same time we published a column about using options in pursuit of a wonderful life.

Self-proclaimed options expert David “Captain Condor” Chau and his entourage lost more than $50 million with a complicated S&P 500 index options strategy, according to MarketWatch, just before the year ended. Some of his followers lost their life savings, with one of them even creating a GoFundMe page to cover his living expenses.

Until our reader wrote in, Captain Condor was unknown to me. I never saw his Wall Street Journal profile, his Charles Schwab Network interview, his Inside Options website, nor his social media. I have, however, seen many people pass through the financial markets’ revolving door that is reserved for self-proclaimed experts who benefit from other people’s money.

Every options expert I know—and I have met only a few, even after decades in the market—would never describe themselves as such. I’m thinking of Susquehanna’s Jeff Yass, Interactive Brokers’ Thomas Peterffy, Goldman Sachs’ John Marshall, and Oppenheimer’s Michael Schwartz, and others who prefer anonymity.

Self-proclaimed experts usually attract trouble through hubris, though I’ve seen bank traders and hedge fund managers annihilate themselves with slavish beliefs in trading ranges. Markets always change, and many people cannot change—or worse, they don’t realize change has occurred. Many successful open-outcry pit traders failed to transition to electronic markets. One former market maker was seen selling shoes at an Illinois mall.

Those stories have strengthened my belief that—for most investors—simple strategies are the best approach. Few people can trade options for the sake of options, but anyone can use options to be a better stock investor.

Over the years, I’ve formulated some principles that I continually refine, and that I share now in honor of our reader and his friend.

• When trading options, have a stock-first, options-second mind-set. Sell cash-secured puts to buy stocks. To sell stocks, sell a covered call. These two strategies will help you buy low and sell high.

• Compound returns are everything, and these two strategies enhance that phenomenon and long-term investing success.

• Huge returns are possible with options, but don’t let that be your focus. Generate “conditional dividends” by selling calls and puts. Those returns can rival and exceed common stock dividends, which generate as much as 50% of historical stock returns.

• Embrace stock price volatility. When stocks sharply decline, options volatility surges. That’s a great time to sell cash-secured puts on stocks you want to own. We call this “time arbitrage,” as short-term volatility is monetized for long-term gain.

• Simple is best. No one perpetually outfoxes the market. Arrogance is deadly. Be skeptical of complicated strategies with many moving parts.

• Focus on risk before reward. Understand why your investment thesis could be wrong. Try to always improve decision-making and trading methods. Remember our Good Investor Rule: Bad investors think of ways to make money. Good investors think of ways to not lose money.

These thoughts are a foundation for an options-centric approach to stock investing. Move slowly. Think of yourself as a perpetual student of markets. Doubt everything, except the benefit of harnessing volatility and time to pursue your long-term financial

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Originally Posted January 14, 2026 – Are You Using Options the Right Way? Don’t Fall Into This Trap.