There’s an old saying: if the only tool you have is a hammer, everything looks like a nail.
Too many options traders think this way. A single strategy is not the way to make money in every market.
The market’s been bullish for 9 straight weeks. Green candle after green candle. Every dip gets bought. Every headline gets faded. So naturally, people get trained. Buy the dip. Stay long. Don’t overthink it.
And then Friday happened…
Here’s the thing: Friday’s selloff wasn’t a surprise. It also wasn’t a guarantee. Look at the post I put in our discord:
That’s the part most people get wrong. They want certainty. They want someone to tell them “sell Friday morning” or “hold everything.” That’s not how this works. What we can do is read the context and understand what’s probable.
And the context last week was screaming for some caution.
SPY was working on its 10th straight bullish weekly candle. The last time we had 9 straight green weeks was December 2023. Right before a pullback. When markets get that extended, they don’t have to pull back — but the probability of a two-sided week goes way up. That’s just math.
Add to that the SpaceX IPO noise. Everyone’s talking about a “once in a lifetime opportunity.” People are selling winners to raise cash. My barometer for peak euphoria is when my mom calls me about a stock… We were close. That kind of retail excitement is a yellow flag, not a reason to panic, but worth noting.
So going into last week, the setup said: trim some winners, stop chasing, add some hedges. Not “sell everything and go to cash.” Just don’t be 100% hammer.
The traders who got hurt Friday are the ones with no other tool.
If selling puts, or buying options is the only move you know, a red day feels like an emergency. You either panic sell at the bottom or you freeze. Neither one is a strategy.
But if you had some hedges on? Friday felt different. I had KO spreads and a SYY trade hit targets when the growth sector was selling off. Sector rotation was working. Defensive names were getting attention while tech bled.
That’s what a diversified approach looks like in real time — not just diversified by stock, but by strategy.
Here’s where we stand now.
We pulled back to levels we hadn’t seen in… two weeks. That’s it. SPY is still above the 10-week EMA. This isn’t a broken market. This is a market that went up 9 weeks in a row taking a breath.
Tuesday SPY pulled “all the way” to the 50ema where we got buying.
Zoom out. The trend is still intact.
What do you actually do from here?
Start building your watchlist. Find the stocks you want to trade when the setup is right. If you have positions that need rolling, next week may give you a better entry to do it. If you’re sitting on cash, that’s not the worst problem to have right now.
Don’t let one red week make you a bear. Don’t let 9 green weeks make you reckless.
The goal isn’t to predict every move. It’s to have enough tools in the box that no single day wrecks you.
That’s what we’re building here.
— Justin