Introduction
If you’re wondering how to trade options profitably, I’m sharing exactly what worked for me: prioritizing A+ setups, relentless selectivity, structured risk rules, and a pod that holds me accountable. I’m Max, a discretionary trader at SMB Capital. After finishing 2020 up mid–six figures, I had back-to-back seven-figure years in 2021, 2022, and 2023, with a major 2022 drawdown that forced me to refine risk and rebuild. Here’s the real Q&A from my conversation that breaks down how I approach consistency, sizing, and execution.
Trader Talks QnA
How did 2020 end for you and what happened after?
2020 was a great year; I ended around mid six figures up. From there, 2021, 2022, and 2023 were all seven-figure years for me.
What helped you continue growth as markets shifted?
One of my best qualities is that in high-opportunity times I’m able to push A trades. In 2021 there were consistently A trades and I used each big win to jump-start the next one. 2022 forced me to refine risk management and become more selective, which led to very consistent performance in 2023.
What changed in 2022 with options and risk?
Early 2022 had range and volatility for options, but once the bear market started, trading options long was extremely detrimental. I had to better define my options trades, playbook A setups, and identify where to put on greater risk. In 2024 I refined the playbook further so I’m clearer on when not to put on risk versus when it’s time to press.
How big was your drawdown in 2022 and how did you recover?
I drew down 50% of my year in 2022 across July to September. From October on, I started from scratch, rebuilt like I did in 2021, and focused only on true A setups. Between March and April 2023 during the banking crisis, I traded my tape-based edge and climbed back to roughly break-even for that prior drawdown period. That reinforced my emphasis on selectivity so I’m mentally ready to size up when A trades appear.
What risk adjustments did you make during the drawdown?
First month, I kept similar risk rules because I hadn’t identified the issue yet. After the second month, I cut to a third of my daily stop to rebuild my base and confidence. Trading is highly mental; once the base was rebuilt, it was easier to scale back up with discipline.
Are you discretionary? How do you quantify an A setup?
Yes, I’m discretionary. I break down the setup and grade it A, A−, B, etc., based on a checklist. If a perfect swing setup does X, Y, Z and one thing is missing by the close, it’s A−; if two things are missing, maybe it’s a B. I have predefined risk amounts per grade. Intuition matters too—if it looks great on paper but my gut says something’s off, I won’t size it aggressively because I won’t manage it well.
How do patterns, catalysts, and risk-reward factor in?
Patterns matter, but risk-reward and pricing (for options) are critical. A great breakout with poor risk-reward won’t work long term. If you consistently identify 3:1 or 4:1 trades and you’re right ~55% of the time, you’ll do well. For options, the contracts must be priced correctly to support long-run expectancy.
Should you avoid B and C setups completely?
Through experience, you can turn B and C setups into A− and B+ by refining characteristics. Last year, I focused on improving intraday trading—initially Bs and Cs—now I size some as A− or B+. I keep their size smaller so they don’t dictate my month, but they build skill and can eventually contribute meaningfully.
How can a trader categorize their setups easily?
Look at success rate—if you’re right ~80% on a setup, that’s likely an A. Count checklist items: catalyst, volume, swing vs. intraday alignment. If you trade in a pod, see if everyone rated it an A. Identify which characteristics give you edge and track them over time.
What does your trading pod look like day-to-day?
We’re constantly communicating—morning calls around 8:30–9:00, sharing ideas at any time. The pod holds each other accountable for trading correctly and sizing correctly. We also have joint trading accounts for the best A to A+ ideas, often multi-day or idea trades, while personal accounts handle quicker tape/intraday executions. Separating accounts helps align sizing and time frames correctly.
What do you look for in pod members?
I’m a straight shooter. You must be confident enough to challenge and accept criticism. Add value by asserting your A ideas and backing them with reasoning. Don’t be passive. Be receptive so you can grow and contribute back to the pod over time.
How are you improving intraday trading and managing risk?
I’m defining rules more clearly, sizing up slowly without being uncomfortable, and using joint accounts to add 20–30% risk on A+ intraday trades. I catalog the best trades to quickly recognize and press them next time. I also seed larger idea trades with a core via options—my comfort zone—so I start with defined risk and better management psychology, then scale if the thesis proves out.
What does executing well actually mean?
Know your strengths. I’m aggressive; others may be systematic. Systematic traders must deploy risk when the playbook says so. Discretionary traders must act when intuition aligns with setup quality. Always deploy your edge when the market presents the moment that fits your mindset and playbook.
How should a new trader start?
Build a base: watch price action, learn why moves happen, and identify repeatable characteristics—clean patterns, volume, catalysts. Demo helps, but you need real capital at a size that triggers true emotions. Survive long enough to see multiple market regimes. After a year, even breakeven traders usually find 2–3 true A+ setups. With proper risk, a few trades can make your year.
Why do some trainees succeed while others stall?
Differentiation of trade size. Many traders size every trade the same. Most traders have a 40–50% win rate, but the best risk 10x on their best setups that win ~80%. If you size 80% win-rate trades the same as 30% win-rate trades, you’ll churn and break even. Top traders also capture edge structurally and mentally and push size when it counts.
What’s your daily workflow with the pod?
Wake around 6:30–7:00, quick premarket check. Morning call ~8:30 to identify A trades and joint trades (A or B+ minimum). Before the open we align on primary tickers. We call out main trades during the session. I often work out midday unless there’s an event. I do a lot of swing trading, so stepping away helps reset. We manage the close, plan after-hours, and keep communicating into the evening if needed.
How do you learn from traders at or above your level?
I pressure-test my A trades with pushback. If multiple trusted top traders agree it’s A+, I may double risk. I also seek perspectives from different styles—idea traders, momentum, non-swing—to capture pieces of their edge and avoid groupthink.
Max Trade Statistics
Here are high-level performance highlights and constraints I discussed as they relate to consistency, selectivity, and recovery after drawdown.
- 2020: finished up mid six figures
- 2021–2023: three consecutive seven-figure years
- 2022: 50% yearly drawdown from July–September, then rebuilt
- Recovered significantly during March–April 2023 banking-crisis volatility
Key Trading Insights from Max
Selectivity and grading are everything. Focus on A trades, define risk per grade, and use pods or teammates to pressure-test conviction. Tape-based opportunities and idea trades can be scaled when risk-reward and conditions align.
- Grade setups (A, A−, B, etc.) with a checklist and predefine risk per grade
- Use options cores to anchor psychology and define risk on bigger idea trades
- During slow markets, protect mindset to be ready to size A trades
- Leverage pod accountability and joint accounts to scale best opportunities
Max Trading Strategy
I combine discretionary tape reading, options-based cores for idea trades, and structured risk rules tied to graded setups. This allows me to stay selective while scaling fast during high-opportunity periods.
A-Trade Playbook and Grading
I define what an A swing or intraday setup must do (X, Y, Z). If one item is missing by the close, it’s A−; two missing, it’s B. Risk is preassigned per grade so execution is consistent.
Options Core with Defined Risk
For big breakouts or idea trades, I build a core position in options with defined risk. This keeps psychology clean, then I scale if price confirms, sometimes growing a C-size option into an A-level risk by the end.
Pod-Driven Scaling and Accountability
With the pod, we align on A trades, challenge assumptions, and allocate joint account risk only to A or B+ ideas. This helps me push size when multiple top traders see the same edge.
Max Tools
I lean on platforms and structures that reinforce execution quality and team alignment. Below are referenced tools and resources mentioned or implied by context.
- SMB Capital resources and team/pod structure
- Tape reading and direct market access routing (sponsor mention: Cobra Trading)
- Options platforms for defined-risk core positions
- Playbook/checklist tracking and trade cataloging
Common Trading Mistakes to Avoid
Avoid sizing every trade the same, long-only options in the wrong regime, and letting slow periods drain your mindset so you can’t press A trades when they come.
- Failing to differentiate size between 80% win-rate A trades and 30% setups
- Ignoring regime shifts (e.g., long options in a bear trend)
- Overtrading when opportunity is low, eroding confidence
- Not codifying a checklist and risk per setup grade
Conclusion
To master how to trade options profitably, grade your setups, assign risk per grade, and protect your mindset so you can press when A trades appear. Build an options core for big ideas, leverage a pod for accountability, and catalog your best trades. Share your questions in the comments and consider subscribing for more deep-dives and weekly options recaps.