To The Moon

Seeing a ton of posts about options selling being a cheat code, money printer, etc. Can I provide a cautionary tale of the risks?

In November 2021, I decided to wheel a decent chunk of money. $SOFI had just come off a triple beat, was still cheaper than its competitors like $UPST, $AFRM, $HOOD, etc., had a massive catalyst coming in the bank charter, was my highest conviction stock, and had great premiums.

The stock was stabilizing after those earnings in the mid $20s. There was a secondary offering and they announced the redemption of their warrants and the stock dropped. I thought it was an opportunity and I sold CSPs when it was in the low 20s at a $19 strike. It immediately dropped to the $17-$18 range. I got assigned.

But I was "smart", I was deploying the capital in three chunks in case it dropped more. So I sold some $16s. It kept dropping, and went to the $14 range.

That was a huge support range and it had bounced hard off that area twice before so I went heavy with the rest of my wheeling money selling $14s aggressively and rolling the $16s down to the $14 range.

Sure enough, it held for the entire month of December. I was making great premiums. Then in January they got the bank charter, and I thought for sure that would strengthen the floor of the stock. I was wrong.

The bottom really fell out. By May, the stock was in the 4s and 5s, I'd been assigned on all my puts with an adjusted cost basis around $15-$16. The premiums were now tiny since the stock had gotten crashed and I needed a triple in the stock price just to break even. Those wheeling shares became a long term hold and I had a paper loss of like 70% in just 6 months.

SoFi continued to triple beat every quarter for the next 3 straight years, but it wasn't until November of 2024, a full 3 years later, that it even touched $14 again, much less $19 which only just happened in July 2025.

I had a stock where the company performed but it still took years to get back to break even.

So, some lessons:

1) Only sell options on companies you like in the long term

2) Even with a company that is performing, you can be underwater if the macro turns against you

3) High IV usually means high beta and that means in a downturn, that stock is probably dropping at least 50%

4) There are downsides to selling options. Be aware of the risks and be ready to accept the consequences of that risk.