My stocks and crypto returned 18.74% in 2025—generating 2.4% alpha over the S&P 500’s 16.3%.
My actual return was 3.98%.
I lost 14.77% on defensive options trading in a year when my equities were generating alpha.
2024 was strong. I returned 30.66% versus the S&P 500’s 25.02%, outperforming by 5.64%. Concentrated positions in AI infrastructure and tech. The strategy worked.
2025 was different. I’d gone defensive. Rotated out of expensive AI positions. Built positions in unloved sectors like Chinese tech. The defensive positioning worked—stocks and crypto up 18.74% for the year, generating 2.4% alpha over the S&P 500.
I’d also started learning options from YouTube videos on covered calls, protective puts, hedging strategies. The logic made sense: protect my downside while waiting for the market correction I thought was coming.
Buying calls on stocks with up momentum worked fine. Then I tried defensive strategies. Set up what I thought was a covered call strategy to hedge my Alibaba position.
It wasn’t covered. I’d sold calls on 1,000 shares but only owned 550 total. By the time I realized the mistake, I was down $23,852 on a single trade. By the time I closed all the BABA option positions—including the follow-up adjustments trying to fix it—the total damage was $20,974. A 226% loss on the premium I’d collected.
Equities generated 18.74% returns. Defensive options trading gave back 14.77%. Net result: 3.98%.
This is that story.
Why I Was Trading Alibaba in 2025
September 2025. I’d rotated out of most AI positions. Nvidia at $5 trillion market cap. Palantir at 15x revenue. The valuations looked stretched.
Chinese tech was the opposite. Years of regulatory crackdowns. Delisting fears. Alibaba had been trading in a range, well below historic highs. Chinese tech oversold. BABA fundamentals solid. Cheap valuation compared to U.S. tech.
I thought I was setting up a covered call on BABA.
September 9: Sold 10 contracts of BABA December $150 calls at $9.30/share.
Premium collected: $9,277
The problem? I’d sold calls on 1,000 shares when I only owned 550.
I was naked short 450 shares worth of calls. This wasn’t covered call hedging. This was a leveraged directional bet that I didn’t realize I’d made.
BABA Rallied. I Bought Back.
September-October 2025: BABA started moving. China’s stimulus package. AI boom. Cloud computing growth. BABA blew past $150 and kept climbing—$180, $190, peaked at $192.67 in early October.
Every dollar BABA rose above $150 cost me $10,000.
My short $150 calls were now deep in the money. Three options:
- Let them get assigned (sell 550 shares at $150, cover 450 shares at market ~$192)
- Roll to higher strikes (extend and pray)
- Buy them back at a massive loss
I bought them back. I still wanted to hold the stock—I believed BABA would go above $200 long-term.
Price I’d sold them for: $9.30
Price I paid to close: $33.11
Loss: $23,852
I didn’t stop there—I immediately sold new calls at $200 strike to give myself more room.
Then I Tried to Recover
After the $23,852 loss, I kept trading. Each move was an attempt to recover what I’d lost.
I made 6 more BABA option trades over the next three months. Buying back those $200 calls. Buying protective puts. Selling new calls at different strikes. These trades clawed back about $3,000, but added complexity and kept me focused on recovering losses rather than moving on.
Total from all BABA options: -$20,974
I’d turned a simple hedging strategy into 8 different option positions across 3 months trying to fix the original mistake.
The 2025 Options Problem
BABA wasn’t my only options mistake in 2025. It was just the biggest.
The three biggest options losses:
- BABA (covered calls gone wrong): 226% loss
- Iridium calls (bear market hedge, expired worthless): 100% loss
- FuboTV calls (closed for pennies): 90% loss
The Mistakes
“Covered calls” sound safe—collect premium while you hold the stock. But that wasn’t really my goal. I was trying to hedge against a crash I thought was coming. The premium was just a side benefit.
Selling calls on a stock you want to own means you’re betting it won’t go up. When you do it with leverage (10 contracts on 5.5 contracts worth of stock), you turn a defensive hedge into a naked short.
Options multiply mistakes. With stocks, errors are bounded. With naked shorts, they compound. A 5% position sizing error in stocks might cost you 5%. In options, it can cost you 50%.
Complexity is the enemy. My best trades in 2024 were simple: buy the stock, hold it, sell when the thesis changes. No leverage. No adjustments. The BABA trade became 8 positions across 3 months. Each layer of complexity made it easier to make mistakes.
The options cost me 14.77% in 2025. That’s not hedging. That’s not income. That’s just expensive.
My 2023-2025 trading documented: overall returns (65.44% vs S&P 500’s 61.28%), winning trades in 2024 (30.66% vs 25.02%), and the options trading that cost me 14.77% in 2025.