Inside today’s Daily Journal…

Trading gets a bad rap.

When most people hear the word trading, they picture some RedBull chugging guy glued to a screen, watching charts flicker, trying to catch the exact moment a stock hits bottom before it rockets back up.

Buy low, sell high… Time the market. Get in before everyone else figures it out.

This approach carries a negative connotation among most serious investors for one good reason – because it’s a losing proposition.

Study after study arrives at the same conclusion: the overwhelming majority of active traders underperform a simple index fund. Below are just a few examples…

The problem isn’t effort or intelligence. It’s the game itself.

Trading around short-term price movements requires you to be right about both direction and timing: know what to buy, when to buy, and when to sell. And to do this consistently… The deck is stacked against you before you even enter the casino.

But in May of last year, Porter and I (Ross Hendricks) set out to prove a point: not all trading is

reckless speculation. We built a framework that doesn’t require market timing, technical analysis, or the belief that we’re smarter than every other participant staring at the same price charts. It’s a disciplined, systematic, and genuinely misunderstood approach that flips the traditional trading paradigm on its head.

We started by acknowledging one simple reality: no one can consistently anticipate where stock prices will trade in a given day, week, or month. So instead of predicting the unpredictable, we build a portfolio that can handle whatever the market throws at us. The secret is non-correlation, meaning we create a series of trades that offset one another. When one part of the portfolio is underperforming, the other non-correlated return streams kick into high gear. This way, we create multiple ways to win – regardless of whether the market goes up, down, or sideways.

This is the same basic strategy Porter uses to manage the money in his family office, which has absolutely trounced the market since inception. It’s the same strategy I’ve used in my own portfolio for generating 50% annualized returns. And it’s the same one I taught my own mother, who went from earning 5% in money market funds to crushing the S&P 500.

It’s also the same strategy we have been using in The Trading Club. Porter put $100,000 of his own cash into a live trading account to launch this new Porter & Co. service in May 2025, with the goal of earning 20% to 30% annualized returns.

Less than 10 months in, that $100,000 has now grown into $131,520 as of yesterday’s close – a 31.5% return in under 10 months, and more than double the market’s 13.5% return over the same period:

So, how did we do it?

Today, we’ll showcase the core strategy that makes up the bread and butter of our trading approach. This doesn’t require perfectly predicting the future, technical analysis, or constantly buying low and selling high. It only requires two things: knowing what something is worth and having the patience to wait.

That, in essence, is the art of selling options.

A put option gives its buyer the right to sell shares at a set price – called the strike price – before a set date known as the expiration date. The put buyer gains price certainty that limits their downside risk by locking in a future sales price regardless of how far the shares might fall by expiration. So in essence, put options provide a form of insurance for the stock market. And like all forms of insurance, it comes at a cost, in the form of an upfront cash premium.

The put seller on the other side of the trade earns the cash premium. And in exchange, the put seller guarantees to buy shares at a set price before the expiration date. If the stock falls below the strike price, the put seller is obligated to buy shares at the strike price. Conversely, if the stock stays above the strike price, the put seller keeps the premium and walks away from the obligation once the option expires.

Here’s the key: we only sell puts on stocks we want to own at current prices. That means we only write insurance against outcomes that we’re happy to “pay out” on: so we end up owning a stock that we want to own anyway. And in exchange for agreeing to buy the shares, we collect cold hard cash premiums.

Read that again slowly. As a put seller, you get paid to agree to buy something you already wanted, at a price you already found attractive.

This approach flips the traditional trading paradigm on its head. You don’t need to perfectly time the bottom in prices, and outsmart the market by constantly buying low and selling high. Instead, you let the market come to you, by naming your own price and then get paid to wait.

Selling puts isn’t about predicting the market. It’s about being paid to wait for the stocks you want to own — at the price you decide to pay.

Let me show you how this works with a tangible example.

Every put sale we make starts with the same deep dive, fundamental stock research we perform everyday at Porter & Co. We narrow down a universe of stocks to our highest-conviction ideas, and then, we use the options market to build in an extra margin of safety.

One of our highest-conviction ideas of the past year was in shares of Permian oil and gas royalty company Viper Energy (VNOM), which we identified as an excellent value at $40 per share. On three separate occasions when VNOM shares traded near this price, we sold $40 strike puts, as notated on the chart below:

The first trade took place on May 30, when we sold one Viper Energy (VNOM) $40 cash-secured put, expiring August 15, 2025. We received $294 in cash premiums, or $2.94 per share (each option contract consists of 100 shares).

For those interested in the detailed mechanics at work here, we made this exact same trade available for Daily Journal subscribers in an April 28 issue titled “Wall Street’s Free Lunch.”

Fast forward to the option expiration date on August 15, and VNOM shares closed below the $40 strike price, meaning the option expired in-the-money. This triggered our purchase of 100 shares at $40, and after netting out the $2.94 per share in cash premiums, our effective cost basis was reduced to $37.06 per share.

Then, we continued executing the same systematic put-selling strategy as the shares continued trading at the same attractive price.

One week later on August 22, we sold another Viper Energy (VNOM) $40 cash-secured put, expiring November 21, 2025, for $204 in net cash proceeds, or $2.04 per share.

This trade played out the same way, with the option expiring in-the-money on November 21, triggering our purchase of another 100 shares at a cost basis of $37.96 ($40 – $2.04).

Fast forward to yesterday, March 16, with VNOM shares closing at $44.90, and we’re now up between around 22% on both 100-lot share purchases.

This works out to annualized returns of between 27% and 35% on these 100-lot share purchases as of yesterday’s closing prices.

Finally, we repeated a similar trade on December 4, this time selling two Viper Energy (VNOM) $40 cash-secured puts, expiring March 20, 2026. We received $528 in net cash proceeds, or $2.65 per share. This is currently an open trade with just a few days left until expiration, as shown below:

With VNOM shares trading well above the $40 strike price, these two options will likely expire out-of-the-money on Friday. In this scenario, we’ll keep the premiums free and clear. This trade required $8,000 in capital – to purchase the shares in case they expire in-the-money – which was set aside as restricted cash at the time of the put sale. The $528 in premiums earned reflects a 7% return on invested capital, or 25% annualized.

So that’s just one example of how we’re consistently compounding capital at our target rate of 20% to 30% annualized returns. Nowhere in this process are we attempting to buy low and sell high. We’re simply identifying high-quality businesses that we believe we can determine a fair value for. And when share prices trade at or below our fair-value estimate, we’re adding in an extra margin of safety by selling puts.

In some cases, those puts end up expiring in-the-money. If so, we own shares of a high-quality business that can compound capital at highly attractive rates. In other cases, the puts expire out-of-the-money, and we’re still earning high rates of return on the put premiums.

We view this as the ultimate “heads we win, tails we don’t lose” approach to trading. And it doesn’t involve staring at a screen all day, frantically buying and selling. We focus on a core group of stocks that we understand, and often make the same series of trades over and over again.

The put-selling approach is only one aspect of the non-correlated return streams we build into the overall portfolio. We also systematically sell covered calls on a portion of our long positions, which provides a steady source of income even if the underlying shares tread water, or even decline in value. Occasionally we’ll also purchase call options, targeting asymmetric upside. Like our British American Tobacco (BTI) call options that have returned over 300%. And along the way, we hedge downside risk by purchasing put options, which are designed for payouts of 10-to-1 in the event of a market crash, thereby protecting the rest of our portfolio.

The end goal: a durable portfolio that can thrive regardless of whether stock prices go up, down, or sideways. And we do it all with 100% transparency, sending members trade details before we place them, using a real-money account, and providing weekly updates as to the performance of the portfolio. We also offer The Trading Club Forum so members can get answers quickly to their trading-related questions.

Our goal is to continue generating 20% to 30% annualized returns over a full market cycle, while taking less risk than the overall market. And while we can’t promise what our future returns will look like, the one thing we can guarantee is a real-world scoreboard that shows everything: the good, the bad, and the ugly. And so far, we’ve received rave reviews from subscribers who all seem to agree that this service is unlike anything else they’ve experienced, including the following testimonials:

From Larry B.:

From Brady G.:

From Jack P.:

From Hershall C.:

We encourage you to check it out and see if this approach makes sense for you. We open The Trading Club up for new memberships once every quarter. And right now, membership is open for the next week only.

Click here to get access.

Tell us what you think: [email protected]

Good investing,

Ross Hendricks
Houston, Texas

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1. Hedge funds are very bearish. Short positions in U.S.-listed ETFs surged 10% last Thursday, the second-largest single-day increase in a decade, pushing total short exposure to the 2022 bear-market peak of 11.6%. Funds are betting heavily against the market due to the energy crisis caused by the war in Iran.

2. U.S. allies reject Trump’s request for Hormuz help. The White House asked China, NATO, and other countries to send warships to help reopen the Strait of Hormuz. Almost universally, the answer has been “no.” European Union foreign ministers voted down expanding their Red Sea naval mission to cover Hormuz. Germany’s defense minister asked bluntly what “a handful of European frigates” could do that the U.S. Navy cannot. And China dodged the question entirely. Meanwhile, Gulf oil exports have plunged 60% since the war started, and crude oil remains stubbornly above $95 per barrel.

3. Mortgage rates aren’t helping housing unaffordability. Mortgage rates jumped to 6.86% yesterday – their highest level since November – meaning the typical monthly payment is nearly double what it was pre-pandemic. Until rates fall meaningfully or housing prices adjust downward, the affordability crisis rolls on.

Uber Technologies (UBER) announced that it will deploy Level 4 autonomous taxis powered by Nvidia’s Alpamayo AI and DRIVE Hyperion platform – starting in Los Angeles next year and expanding to 28 cities globally by 2028… Shares of Uber (a Complete Investor recommendation) are up more than 8% over the past week.

Peter K. writes:

John B. writes:

Kathy D. writes:

Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current portfolio page of the relevant service, here. To gain access or to learn more about our current recommendations, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.