Options are an excellent tool for risk management, not just speculation. When you have a high-conviction view that feels almost certain (e.g., "there is no way they'll hike"), buying options instead of taking a large vanilla position can protect the portfolio from a complete wipeout if your seemingly infallible view is wrong.

Passive, cap-weighted fixed income funds behave like momentum traders, buying more of a bond as its price rises. This is a flawed strategy for fixed income because many bonds are callable, meaning their upside is capped and rising prices increase call risk. Active management can exploit this inefficiency.

With traditional fixed income underperforming, investors seeking yield have flocked to vehicles that generate income by selling equity options. This creates a massive, systematic supply of volatility into the market, which suppresses volatility and encourages "buy the dip" behavior once initial shocks subside.

While seductive, complex trades with multiple conditions (knock-ins, knock-outs) create numerous ways for a core thesis to be correct on direction but still result in a loss. Simplicity in trade expression is a form of risk management that minimizes the pain of a good call being ruined by flawed execution.

In a volatile, rapidly rising market, an 'options crawl' strategy allows investors to stay in the trade while managing risk. It involves selling expensive, high-strike calls that speculators are buying and using the proceeds to finance calls closer to the current price, thus maintaining directional exposure with a defined risk profile.

Long-term economic predictions are largely useless for trading because market dynamics are short-term. The real value lies in daily or weekly portfolio adjustments and risk management, which are uncorrelated with year-long forecasts.

To combat the emotional burden of binary sell-or-hold decisions, use the "Go Havsies" method. Instead of selling a full position, sell half. This simple algorithm diversifies potential outcomes—you benefit if it rises and are protected if it falls—which significantly reduces the psychological pain of regret from making the "wrong" choice.

Thinking about leverage as simply "on" or "off" is limiting. A more advanced approach views any asset with a lower expected return as a potential liability. One can effectively "borrow" it (i.e., short it) to finance the purchase of an asset with a higher expected return, aiming to capture the spread.

Actively write short-term covered calls on individual stocks that have appreciated near your valuation targets. This reframes the options strategy from simple income generation to a sophisticated tool for forcing disciplined profit-taking and rotating capital out of fully valued positions.