Not because I didn’t understand markets or lack of research

But because I stopped following my own rules

On Monday morning at 9am, sitting in my co-working space with a plain black coffee, I wrote down every mistake that led to that number.

Then I figured instead of keeping all this valuable information to myself…

I’d share with you so you don’t repeat it in 2026

Here are the top 3 mistakes that cost me $208,000 in 2025 in 1:30min (and the rules I rebuilt because of them):

Mistake #3: Increasing Risk After Strong Performance Periods (-$50k)

In July, I booked $90,000.

The correct move after a month like that would have been to go to the beach in August and not trade.

Instead, I got greedy.

You see, before August I was only trading 40% of my capital.
Risk was controlled. Position sizing was deliberate.

After the $90,000 July win I:

• increased risk to the maximum
• started trading with 100% of my capital
• loaded full $20k positions instead of $5k

I got overconfident.

This mistake removed my ability to:

• adjust entries

• scale into positions

• wait for confirmation

August performance: -$13,000

September performance: -$37,000

Total damage: –$50k

The rule I rebuilt:

1. Cap the risk per trade independent of recent performance.

2. Phase capital deployment so reserves are always preserved.

These guardrails should help me to avoid betting too big too fast on a trade.

If you’ve had a big winning month recently, this mistake will cost you too. Unless you cap risk immediately

Mistake #2: Initiating New Ideas Instead of Focusing on What Was Already Working (-$58k)

You can only trade 3,000 stocks with options.

At the time, I had 300 stocks fully researched in my Notion database.

That should have been enough.

Instead of squeezing more profit from proven names, I kept hunting for the “next better idea”…

This is shiny-object syndrome.

This cost me:

• lower capital efficiency

• missed scaling opportunities

• mental fatigue from constant research

My execution suffered because my attention was scattered.

Total damage: –$58k

The rule I rebuilt

• Limit new ideas added to research

• Increase exposure only to trades with validated behavior

If you have over 100 trade ideas in your research database then stop. Focus on what you have, not the next big stock.

Mistake #1: Letting Emotions Override Risk Discipline (-$100k)

I still have bad dreams about Birkenstock ($BIRK).

You know the German sandal brand…

This trade alone cost me $20,000

Here’s why I took it:

• Birkenstock is a global brand.

• Q2 2025 earnings looked strong.

• 60% of revenue comes from the US.

• Tariffs were introduced. Prices were raised.

• Growth was 10%+. The brand moat looked real.

So in August, right after my $90k July, I opened a full-size position.

To win big.

A few days later everything broke:

• earnings missed expectations

• Chinese competitors undercut pricing

• the brand moat wasn’t as strong as assumed

Growth stocks get punished when expectations slip.

So did Birkenstock.

I knew the trade was broken, but I didn’t want to admit I was wrong.

So I held.

I told myself it was temporary.

I hoped for a rebound.

Every day I held:

• winners stayed under-allocated

• losers grew larger than planned

• the portfolio skewed weaker

Total damage: –$100k

The rule I rebuilt

• Mechanical stops only

• Predefined scaling rules

• No discretionary overrides. Ever

If you sit in trades that you should have cut then you risk getting bigger losses.

The 3 Rules That Will Make You More Money in 2026

If you remember nothing else, remember this:

• Cap risk per trade independent of recent performance

• Phase capital deployment with reserves preserved

• Enforce mechanical stops with zero discretion

Simple rules. Expensive lessons.

I could have made twice as much as I did in 2025 if I had gained that experience earlier.

But overall, the year ended well as you can read below:

Talk soon,
Iskan
Founder of Constellation Stocks

P.S. Want the exact risk rules, position sizing logic and live option trades?

The same framework I rebuilt after losing $208k

Constellation Stocks is where I document it in real time

Inside Constellation Stocks, you’ll get:

• Real exits, not hindsight charts

• Risk caps before emotion kicks in

• Access to my real options portfolio

• Position sizing rules I actually follow

• Weekly live option trades with full logic

• Strike selection and expiration reasoning

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About the author

Iskan is a full-time professional trader and investor who managed a private equity fund with $120 million in Assets Under Management. He has invested over $80,000 in his trading education and spends more than 50 hours per week researching stocks.

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Disclaimer 1

As a reader of Constellation Stocks, you agree to our disclaimer. You can read the full disclaimer here.

You open the options chain…
And suddenly you’re staring at strikes, expirations, bids, asks, Greeks, and numbers everywhere.

Most beginners don’t lose money with options because options are dangerous.
They lose money because no one shows them how to structure the trade.

That’s what this guide is for.

Why now is the best time to learn it?

Right now, we’re in the most opportunity-rich environment for options traders:

Earnings season = Options Gold Rush

Over the next 6 weeks, price swings will be larger than normal. That’s exactly when options become powerful tools.

They give you a defined risk with asymmetric upside.

This is how in 2025, I earned $173,798 with options, or a 98% account growth.

Today, I’ll walk you through exactly how to buy a call option, step-by-step, using a real example.

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The example we’ll use: Vertiv ($VRT)

I’m bullish on Vertiv and outlined the full trade thesis here:

Instead of buying shares outright, I prefer structuring trades with call options.

This post will show you:

• What you’re actually buying

• How pricing works

• How to avoid common beginner mistakes

• How one option can outperform stock ownership

First: the basics you must understand

Before we dive into the numbers, let’s look at the basics.

1. All options expire

Unlike stocks, options do not last forever.

Every option has an expiration date. After that date, the contract no longer exists.

This is why timeframe selection matters.
You are not just betting on direction, you are betting on direction + time.

2. All options have a “strike price”

The strike price is the price at which you can buy (or sell) shares of the stock.

Example:
If you own a $200 call, you have the right to buy 100 shares at $200, even if the stock is trading far above that price later. Imagine the stock trading at $250 and that you can buy it at $200. That’s a $50 profit per share.

3. All options have an option contract multiplier

This is where beginners get tripped up.

If a stock trades at $120:

• Buying 1 share costs $120

If an option trades at $5.00:

• You are not paying $5

• You are paying $5 × 100 shares = $500

Because options can be used to trade 100 shares of stock. We need to multiply the price of the option by 100 to get its actual value or “premium.”

Why I use call options instead of buying stock

As I outlined in my article here, I’m quite bullish on Vertiv.

Read the trade idea here:

If I’m bullish on a stock, I have two choices:

1. Buy shares

2. Buy a call option

I almost always choose call options, because they allow me to:

• Risk less capital

• Control more upside

• Define downside upfront

What is a call option?

A Call option gives you the right to buy a stock at a specific price within a certain timeframe.

For the $VRT option contract I’m looking at:

• Strike price: $200

• Expiration: March 20, 2026

• Contract price: $7.95

That means:

• I control 100 shares of VRT

• I can buy them for $200 each

• Even if the stock trades much higher later

The highlighted number above is the strike price.

You can choose different time frames for the option expiry. I like to use 3+ month time frame trades.

Why option prices look “weird”

One of the most confusing parts about options is pricing:

The decimal form.

Price is displayed in a decimal form because options represent per-share pricing.

Per share pricing means:

• the option costs $795 for 100 shares,

• then for 1 share the price is $795/100 shares = $7.95.

• The ask price will be $7.95

Each option gives you the right to 100 shares. To buy a call option you need to pay the ask price (the higher one, $7.95) and when you sell you pay the bid price (the lower one, $7.45). So when you buy VRT at $7.95, the price of the option contract is $7.95 x 100 = $795 at $200 strike price. $795 is the option premium.

How beginners get trapped in bad option trades

The biggest silent killer is liquidity.

If a spread is wide, exiting the trade becomes expensive.

But what is a spread?

When you buy, you pay the ask. (the higher price, $7.95)
When you sell, you receive the bid. (the lower price, $7.35)

The difference is called the spread.

In the image above, the spread is $0.6 ($7.95 - $7.35), which is considered quite tight. I only trade options with a tight spread.

Example for a wide spread:

• You buy for $7.95 ($795)

• The bid is only $4.00 ($400)

• You immediately lose $395 just trying to exit

If the spread is wide it’s expensive to exit the contract

How do I optimize the buying price

I always use limit orders at the mid-price.

Mid price is the price between the Bid and the Ask. In the image above this would be $7.65.

Be careful with brokers that advertise “free” trading.

Some platforms are known for poor fills, meaning:

• You don’t get optimal pricing

• They profit from the spread

The Greeks

Last but not least, The Greeks‼️

You do not need to memorize everything.

Two Greeks matter most for beginners:

Delta

Delta shows how much the option price moves when the stock moves $1.

If delta is 0.31:

• A $1 move in the stock ≈ $31 move in the contract

Theta

Theta is time decay.

If theta is -11.85

• The position loses roughly $11.85 per day

Because options expire, their value decreases over time.

This is why:

• I avoid very short-dated options

• I prefer 3+ month timeframes

The payoff: how the VRT trade makes money

Here’s the simplified example:

• Buy March $200 call for $7.95

• Cost: $795

If VRT rises to $250:

• The intrinsic value of the option increases

• The contract appreciates dramatically

In this example:

• Gross profit: $5,000 ($25,000 sale price - $20,000 purchase price)

• Minus premium: $795

• Net profit: $4,205

• Return: ~529%

Important Note: You don’t need to buy the shares. You can simply sell the option contract itself and realize the profit ($4,205) instantly without needing the $20,000 in capital to exercise the trade.

Why this matters

This is not about hitting home runs every trade.

It’s about:

• Limiting downside

• Structuring asymmetric bets

• Letting winners run when volatility expands

This exact framework is how I structure every trade.

In 2025 alone, using this approach helped me grow my account by 98%.

If this helped, here’s the next step

If this breakdown made options feel clearer than before, that’s intentional.

Inside Constellation Stocks, I publish:

• Trade ideas with full logic

• Strike selection

• Expiration reasoning

• Risk management

• Exit plans

👉 Subscribe now and as a bonus get my full Option Trading Guide

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Let me know which options topics you would like me to cover next:

Leave a comment

Talk soon,
Iskan
Founder of Constellation Stocks

About the author

Iskan is a professional trader and investor who managed a private equity fund with $120 million in Assets Under Management. He has invested over $80,000 in his trading education and spends more than 50 hours per week researching stocks.

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Disclaimer 1

As a reader of Constellation Stocks, you agree to our disclaimer. You can read the full disclaimer here.

In 2025, the Constellation Stocks strategy performance went up 98.61% compared to the 18.74% S&P 500 return.

There is no magic behind these numbers. It is simply consistent work:

• finding strong companies for the long side and weak companies for the short side

• spotting valuation catalysts that can play out within 1 to 3 months

• building high-ROI option structures for each idea

• staying disciplined with risk management

In 2025, the strategy proved it can perform well in both market sell-offs and rebounds.

During the tariff-related sell-off in Q1, the strategy returned 19.09%, or $37,519.

In Q2, as markets rebounded and AI hype accelerated, it delivered another 41.14%, or $80,832.

Together, these two high-volatility periods generated about 60% of the total annual return, showing where the strategy performs best.

Q3 was also strong, adding 24.24% to capital, or $47,638.

Q4, however, was quieter, with a return of 3.97%. This highlighted areas where the strategy can be fine-tuned going forward, which I discuss later.

The chart below shows both the quarterly net gains and how total returns accumulated over the year.

The January account size doubling opportunity

January 2026 is shaping up to be a prime window for stock traders.

After a quiet December, implied volatility is expanding.

And earnings season, the Super Bowl for traders, is officially here.

Get ready and become a better trader, considering the paid subscription, which gets you:

• Get feedback on your trades

• Weekly high-conviction setups

• Access to my options portfolio (where I invest my own capital)

• Done-for-you research (to save you 20 hours a week researching)

The paid subscription costs only $9.99/month.

Imagine earning a couple of $1,000 a month with just a $9.99 investment!

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Here is how the Constellation Stocks members have done so far

Real results from stock traders improving their craft.

Here’s a student who made $5.3k on a trade. He came from an IT background.

He achieved this result one month after becoming a founding subscriber of the newsletter and taking two 1:1 calls

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December 2025 turned out to be a low-volatility, sideways market, and several ideas I was positioned in did not move as strongly as expected.

At the same time, for tax optimization reasons, I chose to close some loss-generating positions before year-end, earlier than their January and February 2026 expirations.

In 2026, my focus is on fine-tuning the strategy to perform better in low-volatility, sideways market regimes. This includes cutting underperforming ideas earlier and being more willing to re-enter later, rather than holding positions and letting option value erode due to time decay.

Let’s now take a look at some trade statistics from 2025.

Top 5 winning trades:

CMG +$37,001

AAPL +$36,413

USAR +$35,900

BE +35,626

CRDO +$26,998

Top 5 losing trades:

BIRK -$19,306

TSLA -$15,000

BBY -$12,072

MMYT -$11,280

LOW -$11,138

Total number of tickers traded in 2025: 94

Number of winning trades: 46

Gains from winning trades: +$445,318

Number of losing trades: 48

Losses from losing trades: -$271,520

Total return: $173,798

This is the beauty of options trading combined with proper risk management. Even when losing trades outnumber winners, the strategy can remain profitable as long as winners are allowed to grow and losses are controlled.

Why Long / Short Portfolio

At their core, options allow you to capture non-linear returns from price moves and changes in volatility.

The trap appears when you run only one-sided exposure. If you hold a basket of long calls across names and the market turns, premiums can decay to zero.

The solution is balance. Combining longs and shorts, and carefully selecting underlyings and structures, lets you build a portfolio where winners outweigh losers and the process compounds over time.

To help you become a market-agnostic trader:

• choose a strategy that can make money when the market goes up and when it goes down

• learn how to spot catalysts that can change a stock’s value

• use tools or structures that limit your risk

• accept that you may have three losing trades for every one big winner

• pay attention to major macro events

Hope this was helpful.

And if it was, hit reply & let me know.

Talk soon,

Iskan

About the author

Iskan is a professional trader and investor who managed a private equity fund with $120 million in Assets Under Management. He has invested over $80,000 in his trading education and spends more than 50 hours per week researching stocks.

Disclaimer

As a reader of Constellation Stocks, you agree to our disclaimer. You can read the full disclaimer here.

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After a quiet December, implied volatility is expanding.

And earnings season, the Super Bowl for traders, is officially here.

Get ready!

Let’s dive into my 5 favourite stocks of Q1 2026.

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5. Vertiv Holdings Co ($VRT) - Long

Company Profile

Vertiv is the “invisible backbone” of the AI revolution. As a leading “picks-and-shovels” provider, they don’t build the AI itself, they build the cooling systems and power infrastructure that keep AI data centers from overheating. With a massive backlog of orders, they are currently the indispensable leader in thermal management.

Long Trade Rationale

• The AI Infrastructure Boom: The market for data centers is growing at an incredible rate (11%–15.6% CAGR). Every new AI chip sold by companies like Nvidia needs a cooling system from a company like Vertiv.

• Fundamental Strength: Vertiv isn’t just growing; it’s getting better. Analysts are constantly moving their Revenue and EPS estimates upward as the company beats expectations.

• Dominant Market Share: They are currently the “Gold Standard” in the industry, making them the first choice for big tech companies building out massive server farms.

Key Catalysts Watched

1. New Deal Flow: Any major cooling contracts announced with “Hyperscalers” (like Microsoft, Google, or Meta).

2. Capital Returns: A potential announcement of a share repurchase program would signal massive confidence from management.

3. M&A Activity: Looking for strategic acquisitions that could expand its liquid cooling capabilities (to expand its market share).

4. Debt Management: Watching for continued debt payouts, which would strengthen the balance sheet even further.

Strategy & Entry

I am looking for a Long Option Structure (such as Call Spreads) to leverage this multi-year infrastructure cycle.

My potential entry: $150–$160, Target: $250

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4. Aehr Test Systems ($AEHR) - Short

Company Profile

Aehr Test Systems is a “pick-and-shovel” provider specializing in semiconductor test and burn-in solutions.

Their systems “stress-test” chips under extreme heat and voltage to eliminate early-life failures. A critical step for high-stakes AI processors where a single faulty chip can crash a billion-dollar data center cluster.

While Vertiv ($VRT) represents the “Macro” side of AI infrastructure (massive, high-conviction cooling and power for entire facilities), Aehr represents the “Micro” side.

They occupy a high-risk, high-reward niche: testing the individual chips before they ever reach a Vertiv-cooled rack. Their technological moat is wafer-level testing, allowing thousands of chips to be stressed simultaneously to save manufacturers time and millions in potential recall costs.

Short Trade Rationale

• It has a high customer concentration.

• Currently generating losses and negative FCF.

• They cover a small niche with restricted growth potential and risk to demand swings, not all semiconductor makers need wafer-level burn-in for all products.

Key Catalysts Watched

• EPS and Revenue Revisions Down

• Book-to-bill ratio for the quarter was slightly above 1

Strategy & Entry

$AEHR is the perfect spread trade with $VRT.

Vertiv (VRT) and Aehr Test Systems (AEHR) represent two opposite ends of the “AI infrastructure” trade. While both are technically linked to data centers, their fundamental momentum and market positioning couldn’t be more different right now.

A spread trade (long VRT / short AEHR) allows me to profit from the widening performance gap between these two companies while hedging out general market risk.

You are longing the indispensable infrastructure provider with a monster backlog (VRT) and shorting a niche, money-losing tester (AEHR) that is still trying to prove it belongs in the AI conversation.

My potential entry: ~$20, Target: $12

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Now let’s dive into the top 3

Curious what the top 3 are?

Get my top 3 picks and the full 2026 playbook completely free for the next 7 days.

After that, it’s just $9.99/month to trade like a pro

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Especially if you also have a busy full-time job, kids and a family

But in this article, I’ll show you how to determine if a stock is worth researching in less than 5 minutes.

The framework here is a part of the $15,000 professional trading training I purchased in 2023.

If you are not a part of Constellation Stocks, subscribe below: 👇

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Find a reason to say ‘no’ as soon as possible

When I analyze a stock, I try to find a reason to say ‘no’ as soon as possible. When you haven’t found a reason within a few minutes, you have found an interesting stock.

I’ll teach you how to do a quick stock screening in 7 steps via the free Koyfin analytical platform. We take a growth company, Vertiv Holdings ($VRT), as an example.

Step 1: Business first: what does the company actually do?

Go to the ‘Snapshots / Description’ and look at the description:

• What products or services does the company sell?

• Which end markets does it serve?

• What is the sales geography (US, Europe, global, emerging markets)?

If you can’t explain the business in one or two sentences, stop here.

Step 2: Growth profile: Where is the company going?

Go to the ‘Analyst Estimates / Estimates Overview’ and look at the company growth.

Markets care more about the future than the past.

Focus on consensus forecasts (the experts’ best guess) for the next 1–2 years:

• Revenue growth 10%+

• EPS growth 10%+

When most experts predict a company will grow by 10% or more, it is a great sign that the business is a growth stock and is expected to do better than the rest of the market.

VRT is a growth stock 👇

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Step 3: Revisions: what are analysts changing?

Go to the ‘Analyst Estimates / Estimates Trends‘ and look at the consensus revisions.

What are consensus revisions? When all the experts change their minds together and raise their guesses about how much a company will earn, it’s called a consensus revision.

For longing a stock you’d want an upward trending revision trend:

• Increase in the Revenue estimate revisions

• Increase in the EPS estimate revisions

Positive revisions often matter more than absolute growth numbers.

When a company has an upward trending revision trend it indicates a fundamental momentum. While a static “consensus forecast” tells you what the market currently expects, the trend of revisions tells you where the market is going.

VRT ticks the Revenue and EPS estimate revisions boxes. All lines are trending upwards.

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Step 4: Margins: the quality of growth

Go to the ‘Analyst Estimates / Actuals and Consensus‘.

To determine the true quality of a business, you must look past top-line revenue and focus on margins. While many companies can grow sales, high-quality businesses convert that growth into increasing levels of profit through operating leverage.

I look at:

• Yearly Gross margin growth

• Yearly EBITDA margin growth

Analyzing the Trend, Not Just the Level

The specific number matters less than the direction of the trend. I look for specific signals:

• Expansion vs. Shrinkage: Are margins growing as the company scales?

• Stability vs. Volatility: Is the profitability predictable, or does it swing wildly with cycles?

• Turnaround Potential: Is there a clear shift from negative to positive margins?

Why it Matters: Revenue growth without healthy margin dynamics is often “low-quality” growth. If costs rise faster than sales, the business model is fragile.

Vertiv Case Study: Confirmed Operating Leverage

$VRT$ is a prime example of high-quality growth. Its adjusted operating margin expanded from 20.1% in 2024 to an estimated 22.3% in late 2025. This expansion, driven by a shift toward high-margin liquid cooling products and procurement productivity, confirms that $VRT$ has powerful operating leverage. It is making more profit on every new dollar of AI-driven sales.

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Step 5: Shareholder value: how management treats owners

Go to the ‘Snapshots / Dividend‘.

Evaluating a company’s growth isn’t enough; you must also evaluate how management handles the cash that growth generates.

We look at Shareholder Yield because it provides a holistic view of capital return that simple dividend yield misses.

1. Calculate the “Total” Shareholder Yield: Don’t just look at dividends. True shareholder value is the sum of:

   1. Dividend Yield: Direct cash payments to you.

   2. Buyback Yield: The percentage of shares management retired from the market.

   3. Debt Paydown Yield: Cash used to strengthen the balance sheet and reduce interest risk

2. Benchmark Against the “Risk-Free” Rate: Compare this total yield to the US 10-year Treasury Yield (currently 4.17%).

   1. Is there a clear premium? If a company’s shareholder yield is lower than the 10-year Treasury, you are effectively taking “equity risk” for a return lower than what you could get from a guaranteed government bond.

3. The Red Flag: Watching for “Stealth” Dilution. A critical reason we monitor Buyback Yield is to spot high share dilution.

   1. If a company issues new shares, often through excessive stock-based compensation, it dilutes your ownership. A Buyback Yield deeper than -5% is a massive red flag. It means management is creating “new” shares faster than they can grow the business, which can sap the value of your holdings even if the company’s total profit is rising.

The VRT Strategy Note: VRT currently pays no dividends and runs no buyback program. For a high-conviction growth company, this is actually a positive signal. It indicates management is reinvesting 100% of their cash back into the business to capture the massive AI infrastructure boom, rather than trying to “manufacture” EPS growth through buybacks.

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Step 6: The “Growth-Adjusted” Price Tag

Go to the ‘Analyst Estimates / Actuals and Consensus’.

When looking at $VRT$, the goal is to see if its rapid growth justifies its premium price. I use the PEG Ratio (Price-to-Earnings divided by Growth) to put the valuation in context:

• PEG < 1 (A Bargain): You are paying less for the stock than its growth rate suggests it’s worth.

• PEG ≈ 1 (Fairly Priced): The price is perfectly in sync with the company’s growth.

• PEG > 1 (Premium Price): High expectations for future success are already “baked into” the current price.

The Current VRT Case Study

As of early 2026, $VRT$ presents a unique case of a “balanced” growth stock:

• Forward P/E (~33x): On its own, this looks “expensive” compared to slower industries.

• Next-12-Month (NTM) EPS Growth (28.04%): This is the “speed” at which the company is growing.

  • How it’s calculated: This 28% figure represents the consensus estimate from Wall Street analysts for $VRT$’s earnings growth over the next year. It is derived by comparing the estimated earnings for the next 12 months against the current year’s results.

• The PEG Baseline (~1.18): By dividing the 33x P/E by the 28% growth rate, we get a PEG near 1.

• The Verdict: The stock is fairly valued. Its price is rising with its actual earnings growth rather than getting ahead of it.

Pro Tip: “Expensive” does not mean “uninvestable”. High-performing companies can stay “expensive” for years if they keep beating expectations and maintaining their AI momentum.

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Step 7: Capital efficiency - ROIC

Go to ‘Financial Analysis / ROIC’

For longing stocks look for companies with a ROIC (Return on Invested Capital):

• >10% for non-technology-driven companies

• >15% for technology-driven companies

You want to look for companies that use their cash to generate even more growth.

VRT has had >15% ROIC in the last 2 years.

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Potential high-quality growth stock

Did you not find anything that turned you off so far in these 7 steps? Great! You’ve found a potential Growth Stock! It’s time to put it on the watchlist and analyze it more thoroughly.

All in all, Vertiv is a leader in the development of cooling solutions for data centers and communication networks. Revenue and EPS double-digit growth is implied in the coming years, margins are expanding, and capital efficiency supports the growth narrative. Quantitatively, this makes Vertiv a strong potential long candidate.

Before pulling the trigger, you should always cover the scope of qualitative factors too:

• Comparable Analysis

• Earnings History of Beat/Miss

• Management Guidance

• Foreseen Valuation Catalysts

About the author

Iskan is a professional trader and investor who managed a private equity fund with $120 million in Assets Under Management. He has invested over $80,000 in his trading education and spends more than 50 hours per week researching stocks.

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Disclaimer 1

As a reader of Constellation Stocks, you agree to our disclaimer. You can read the full disclaimer here.

Disclaimer 2

This post contains affiliate links. If you make a purchase through these links, I may earn a commission at no additional cost to you.

Year-to-date, the Constellation Stocks portfolio is up 117.76% compared with the S&P 500, which is up 17.81%.

There is no magic behind these numbers. It is simply consistent work:

• finding strong companies for the long side and weak companies for the short side

• spotting valuation catalysts that can play out within 1 to 3 months

• building high-ROI option structures for each idea

• staying disciplined with risk management

In November, we paid close attention to economic data releases after the government shutdown ended. We needed this to decide the right balance between longs and shorts in the portfolio.

To stay bullish into year-end, I wanted to see two things:

a) expected inflation levels, strong retail sales, solid ISM Services data and a cooling labor market to support yesterday’s Fed rate cut

b) strong earnings and guidance from companies reporting their Q3 results

We got all of that. The extra volatility in November was noise to me, and I remain bullish into the year-end.

We also saw a strong rotation from growth to value stocks and a drop in market breadth. Because of that, I opened shorts in AI-related companies with unproven business models and stretched valuations like , and in consumer discretionary names under pressure like and . On the long side, I added interest-rate-sensitive positions such as the Biotech ETF and , with expirations in February and March next year.

Everything I wrote in the last publication still applies — all of this was covered in detail there.

Considering the stagnating trend of the broad market, November turned out to be a good month for our portfolio.

We closed 23 trades: 13 longs (call structures) and 10 shorts (put structures).

Among these were 11 winning trades with $58,435 in realized gains and 12 losing trades with $44,913 in realized losses. Realized monthly profit was $13,522, or 8% on capital.

The average winner generated $5,312, and the average loser was $3,743.

Average ($) Winner to Loser ratio: 1.42x (5,312/3,743)

Winning to Losing ($) trades ratio: 1.30x (58,435/44,913)

The gains were driven mainly by one trade — puts on which brought $22,346 profit.

We have been trading since July 2025, and in total, it has brought us $37,007 in realized gains. Here is a transaction record:

It is the job of every disciplined trader to maximize the winner-to-loser ($) ratio so you can still earn even when the count of losing trades exceeds winners.

That outcome is only possible when you cut losing positions and scale into winners.

This is how the classic trading dilemma resolves: identify positions that are unlikely to turn into winners over time, cut the losses, and redirect capital to the winners or initiate new, higher-conviction ideas.

Why Long / Short Portfolio

At their core, options allow you to capture non-linear returns from price moves and changes in volatility.

The trap appears when you run only one-sided exposure. If you hold a basket of long calls across names and the market turns, premiums can decay to zero.

The solution is balance. Combining longs and shorts, and carefully selecting underlyings and structures, lets you build a portfolio where winners outweigh losers and the process compounds over time.

To help you become a market-agnostic trader:

• choose a strategy that can make money when the market goes up and when it goes down

• learn how to spot catalysts that can change a stock’s value

• use tools or structures that limit your risk

• accept that you may have three losing trades for every one big winner

• pay attention to major macro events

YTD Performance

I am running this strategy for the second year.

In 2024, I focused on improving the robustness of the approach and ran many experiments that did not translate into consistent returns, finishing the year roughly flat.

In 2025, I am doing well and deliver value to those starting their journey in trading in general and stock options specifically.

Cumulative YTD Return in November reached 117.76%.

Hope this was helpful.

And if it was, hit reply & let me know.

Talk soon,

Iskan

P.S.: if you want to become a better trader fast, then consider the paid subscription where you get:

• a private community

• access to analytical tools I’ve built for my own workflow

• real-time commentary on how I’m thinking through trades

• breakdowns of high-conviction setups I’m watching (to save you 20hrs/week on research)

Subscribe now

Last week, a popular media narrative tried to explain why the stock market was down:

The market reacted accordingly by pricing in a no-change decision for the Federal Reserve at its next meeting on December 10, 2025 (as indicated by CME FedWatch data).

How robust is this explanation?

We know the labor market has continued cooling, but nothing too dramatic. Continuing jobless claims, a proxy for the number of people receiving unemployment benefits, reached 1.94 million in the week ended Nov. 1. That’s only slightly higher than the 1.93 million in the week ended Sep. 13, which was the last available official reading before the government shutdown.

Private businesses added 42,000 jobs in October 2025, according to the ADP Employment Change report, indicating modest job growth.

Other economic indicators don’t show significant weakness either. The ISM Manufacturing PMI and ISM Services PMI for October held steady.

In fact, ISM Services (which forms the backbone of the U.S. economy) signaled continued expansion.

Next week, we’ll start seeing the economic data releases that were delayed by the shutdown, bringing the schedule back on track.

Constellation Stocks still expects another rate cut at the December FOMC, but admittedly this is largely guesswork. Either way, we don’t anticipate the December rate decision to have any meaningful impact on the markets.

Why?

Because we don’t see any signs of an impending recession or stagflation. Even if the Fed keeps rates at current levels, it would reassure markets that the U.S. economy and GDP growth are still solid — key pillars of our bullish outlook.

Given this backdrop, we view corporate earnings as the crucial force driving the market now. In the S&P 500, the Q3 earnings season beat historical averages for both revenue and EPS, and the revision trend for Q4 2025 is looking up.

The main risk we see today is the Fed waiting too long to cut rates. However, that risk seems distant at the moment, as the Fed appears highly attentive to labor market layoffs and the health of consumer spending.

Inflationary pressures from tariffs are also easing, far fewer CEOs cited tariffs as an inflation concern this earnings season.

(We’ll discuss our place in the post-COVID inflationary cycle, and how well the Fed is reacting to it, in the “Piece of Knowledge” section later on.)

Zoom In on Corporate Earnings

Thus far, 92% of S&P 500 companies have reported actual results for Q3 2025. Of these, 82% posted EPS above analyst estimates — above the 5-year average (78%) and the 10-year average (75%).

On the revenue side, 76% of S&P 500 companies have reported actual revenues above estimates, exceeding the 5-year average (70%) and the 10-year average (66%).

This quarter is on track to mark the highest net profit margin for the S&P 500 in FactSet’s records (which go back to 2009). The previous peak net margin was 13.0% (in Q2 2021). Q3 2025 also represents the seventh consecutive quarter of rising profit margins.

Looking ahead, analysts believe net profit margins will be even higher in 2026. Currently, the estimated net profit margins for Q4 2025, Q1 2026, and Q2 2026 are 12.8%, 13.3%, and 13.7%, respectively.

We are also seeing upward revisions for upcoming results. Expectations for Q4 2025 earnings and revenues have been revised higher since September 30.

There remains a wide discrepancy between sectors (as usual), but overall the trend is positive.

Even more encouraging, earnings forecasts for 2026 have been bumped up as well — now implying about 13% year-over-year earnings growth for the S&P 500 next year.

It’s important to remember how much future earnings drive current market conditions. On average, the market prices in earnings about 2–3 quarters ahead. If any factor emerges that could hurt future growth, the market will react swiftly. And if such a headwind looks like it will persist, it can pull the market down and let the bears take over.

One concern we’ve heard is that valuations are stretched: the S&P 500’s forward 12-month P/E ratio is near an all-time high, prompting skeptics to warn of a “bubble”.

However, P/E ratios need to be viewed in the context of growth. We often consider the forward PEG ratio (forward P/E divided by expected earnings growth) to gauge valuation. Right now, the S&P 500’s forward PEG is around 2.34×, which in our view doesn’t signal an overbought market.

Even “Magnificent 7” have forward P/E multiples that appear reasonable, with no clear signs of bubble-like conditions.

So, what’s actually happening in the market today?

We see the current pullback as a healthy rotation between industries and sectors, a normal correction within an ongoing bull market.

Stocks listed on the Nasdaq have been sold off more heavily than those on the NYSE, meaning the downturn has been concentrated largely in tech rather than spread across all sectors.

In fact, the market breadth is weaker on the Nasdaq: a smaller percentage of Nasdaq stocks remain above their 50-day moving averages compared to NYSE stocks, underscoring the tech sector’s relative weakness.

Potential Triggers Behind the Pullback:

1. Profit-taking in high-flying stocks (especially AI-related). Many stocks with stretched valuations, particularly in the AI sector, are experiencing a pullback after a period of rapid gains.

   It appears we may be near a peak in revenue growth rates for the overall AI theme. The beneficiaries of the AI boom will continue to grow, but at a slower pace.

   For example, $TSM, the leading semiconductor foundry’s revenue, is forecast to keep growing over the next three years, but at a decelerating rate. To justify future stock price appreciation, these companies eventually need to “reset” to a lower growth trajectory. The pullback we see now is likely that “reset”. After this, valuations can still rise further, just on a more gradual growth path.

   

   Could growth rates accelerate again? Absolutely — new capital expenditure (CAPEX) announcements (for data centers, AI hardware, etc.) could re-ignite growth and are worth watching. But for now, current forecasts already reflect the CAPEX plans announced so far.

2. Revised timelines for AI investments paying off. Investors may be adjusting expectations on how quickly massive tech CAPEX will translate into profits.

   A bottleneck in power generation has started to affect the timeline for bringing new AI data centers online.

   

   In other words, the huge investments in AI infrastructure may take longer to yield “new” money due to these power and capacity constraints.

With all that said, here’s how we’re positioning our long/short stock options strategy as we head toward year-end.

👉 Inside the paywall:

• Our L/S Stock Options Portfolio Update

• Piece of Knowledge: How Modern Monetary Policy Operates

📊 YTD, our strategy's cumulative return is +101.22%.

📩 Upgrade to a paid plan to unlock access to our live trades, analytical tools, and private chat community.

Read more

Happy Weekend!

Here is the strategy performance recap for October 2025.

October was a fruitful month with realized outcomes from 17 trades: 9 longs (call structures) and 8 shorts (put structures).

Among these were 8 winning trades with $72,770 in realized gains and 9 losing trades with $43,980 in realized losses.

The average winner generated $9,096 and the average loser was $4,887.

Average ($) Winner to Loser ratio: 1.86x (9,096/4,887)

Winning to Losing ($) trades ratio: 1.65x (72,770/43,980)

Monthly return: 10.6%

Cumulative YTD Return: 101.22%

It is the job of every disciplined trader to maximize the winner-to-loser ($) ratio so you can still earn even when the count of losing trades exceeds winners.

That outcome is only possible when you cut losing positions and scale into winners.

This is how the classic trading dilemma resolves: identify positions that are unlikely to turn into winners over time, cut the losses, and redirect capital to the winners or initiate new, higher-conviction ideas.

Here is the October realized P/L breakdown by the specific trades executed:

Months in columns indicate when the trades were initiated.

My portfolio P&L was driven by a handful of positions that had the largest impact on overall results. They were helped positively by , and negatively by .

These were the option trade structures:

The reasoning behind the trades was shared throughout the month.

Major indices rose in October, primarily led by the Technology sector and AI-related stories.

YTD Performance

I am running this strategy for the second year.

In 2024, I focused on improving the robustness of the approach and ran many experiments that did not translate into consistent returns, finishing the year roughly flat. The backdrop was favorable for a long/short framework, with plenty of volatility events, but a lack of experience in risk management and idea-generation processes limited performance at that time.

In 2025 I am doing much better and feel I can deliver value to those starting their journey in trading in general and stock options specifically.

Cumulative YTD Return in October reached 101.22%.

I’ve improved the risk management process and look forward to reaching July’s ATH by the end of the year.

YTD breakdown by particular trades:

The strategy performs especially well during periods of elevated market volatility, such as April and July 2025.

Why Long / Short Portfolio

At their core, options allow you to capture non-linear returns from price moves and changes in volatility.

The trap appears when you run only one-sided exposure. If you hold a basket of long calls across names and the market turns, premiums can decay to zero.

The solution is balance. Combining longs and shorts, and carefully selecting underlyings and structures, lets you build a portfolio where winners outweigh losers and the process compounds over time.

More in the Options Playbook

Alongside these monthly performance reports, I share real-time trade actions and market views in the Options Playbook section of this newsletter.

Consider becoming a paid subscriber to access everything and stay aligned with my trading journey.

Subscribe now

All subscribers receive a free guide with theory and practical cases in stock options trading.

Now we have three premium tools available for paid subscribers:

1. Substack chat, where I comment on markets and trades.

2. Portfolio Dashboard, to track trades I execute live and to monitor my current long and short options book.

3. Stock Ideas Pipeline, where I track, analyze, and prepare stock ideas before they turn into trades.

Constellation Stocks

Real options trades, portfolio performance, and the process behind consistent 100%+ annual returns

By Iskan

The event featured three panel discussions. The first one, “Generative AI: Competitive Advantage or Competitive Necessity”, was presented by Paul Johnson, the school’s Executive Director.

It was a great introduction to the broader AI landscape, but what I really liked was how Paul broke down the math behind hyperscalers’ earnings and how much they’d have to grow to justify the huge CAPEX being poured into AI infrastructure.

The second panel, “AI Tools Powering the Next Generation of Investment Research”, moderated by Brett Caughran from Fundamental Edge, was full of insights for anyone working with data and equity research.

The speakers, Tarun (Endex AI), Kris (Hudson Labs), and David (Portrait Analytics), shared an interesting perspective: access to data is becoming less monopolized by giants like SPGI 0.76%↑, FDS -1.16%↓, and MORN 0.43%↑. The AI moat is shrinking, and that’s a signal for investors to revalue those businesses. Just look at FDS -1.16%↓ valuation dynamics.

Personally, I took away a lot of ideas for optimizing the stock analysis workflow in my own strategy. Many PMs already have AI tools or even “AI analysts” working for them 24/7 - and that’s where the real advantage in data processing is moving.

The final panel, “Investing with Generative AI”, brought the discussion from theory to practice. Real portfolio managers shared how they integrate AI into their investment process, particularly in analyzing software companies that are either benefiting from or being disrupted by AI - think CRM -0.82%↓.

Panelists included Brett Caughran (Fundamental Edge), Andrew Freedman (Hedgeye), and John Belton (Gabelli Funds).

Big thanks to Gabelli School of Business and Fundamental Edge for putting this together. It was one of the most thought-provoking events I’ve attended this year.

Here’s a photo from the school’s trading floor:

The latest inflation data came in lower than expected, keeping the door open for two additional Fed rate cuts before year-end.

The next major event is the press conference with the Fed Chair on October 29, where we could finally hear an update on the labor market, since the September data hasn’t been released yet due to the ongoing government shutdown.

According to Bloomberg, weekly jobless claims point to a continued cooling trend in the labor market.

Corporate Earnings

We are in the middle of the earnings season, and results so far have been solid, supporting the market’s bullish case.

For the 99 S&P 500 members that reported Q3 results as of October 22, total earnings increased by 13.7% year over year on 8.2% higher revenues. EPS estimates were beaten by 86.9% of companies, and 81.8% beat revenue estimates. In total, 75.8% percent beat both EPS and revenue expectations.

For Q3 2025 overall, earnings growth is expected at 7.3% on 6.7% revenue gains. These estimates have been steadily increasing since the start of the quarter.

The chart below shows expectations for 2025 Q3 in terms of what was achieved in the preceding four periods and what is currently expected for the next three quarters.

The chart below shows the overall earnings picture for the S&P 500 index on an annual basis.

There is still a high discrepancy in the sectors’ quarterly earnings performance. As per Zacks’ sectors structure, 9 out of 16 sectors are expected to deliver less earnings relative to the year-earlier period. These include Cons. Staples (-4.8%), Cons. Discretionary (-4.7%), Medical (-4.3%), Autos (-25.3%), Industrial Products (-1.1%), Construction (-13.8%), Transportation (-5.9%), and Energy (-6.4%).

On the positive side, 7 of the 16 Zacks sectors are projected to post positive growth, including Basic Materials (+2.0%), Retail (+5.2%), Technology (+11.5%), Aerospace (+248.6%), Finance (+23.4%), and Business Services (+4.7%).

Finance sector recovery growth is a backbone for a market bull case.

As of October 22, 2025, we have Q3 results from 54.5% of the sector’s total market capitalization in the S&P 500 index. Total earnings for these Finance sector companies are up +23.0% from the same period last year on +12.0% higher revenues, with 97.0% beating EPS estimates and 87.9% beating revenue estimates.

Next week, with more than 800 companies reporting results, including 5 of the Magnificent 7 members and almost a third of S&P 500 members.

If there are no surprises related to the truce negotiations with China, I do not expect any major shocks from earnings. That makes the Fed conference on Wednesday the main event to watch.

Portfolio Update

I will be entering the next week with the following L/S book structure:

Instructions on how to read the image:

👉 Cell colors distinguish the month of the option contract expiration from November to February 2026.

👉 Numbers in brackets = portion of a full-size position, depending on risks and conviction.

📌 I share position updates for paid subscribers in a special data sheet live.

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During the week, I added 6 newly researched ideas based on recent earnings reports to a shared Stock Ideas Pipeline: 3M Company , Vertiv Holdings , RTX Corporation , Steel Dynamics , GE Aerospace , and Cleveland-Cliffs .

The following companies are on my watchlist as potential candidates for new positions, depending on how catalysts develop next week.

Piece of Knowledge

A few weeks ago, I had the pleasure of joining an outstanding event organized by Fordham University Gabelli School of Business. The topic couldn’t be more relevant - AI in Value Investing.

The event featured three panel discussions. The first one, “Generative AI: Competitive Advantage or Competitive Necessity”, was presented by Paul Johnson, the school’s Executive Director.

It was a great introduction to the broader AI landscape, but what I really liked was how Paul broke down the math behind hyperscalers’ earnings and how much they’d have to grow to justify the huge CAPEX being poured into AI infrastructure.

The second panel, “AI Tools Powering the Next Generation of Investment Research”, moderated by Brett Caughran from Fundamental Edge, was full of insights for anyone working with data and equity research.

The speakers, Tarun (Endex AI), Kris (Hudson Labs), and David (Portrait Analytics), shared an interesting perspective: access to data is becoming less monopolized by giants like , , and . The AI moat is shrinking, and that’s a signal for investors to revalue those businesses. Just look at valuation dynamics.

Personally, I took away a lot of ideas for optimizing the stock analysis workflow in my own strategy. Many PMs already have AI tools or even “AI analysts” working for them 24/7 - and that’s where the real advantage in data processing is moving.

The final panel, “Investing with Generative AI”, brought the discussion from theory to practice. Real portfolio managers shared how they integrate AI into their investment process, particularly in analyzing software companies that are either benefiting from or being disrupted by AI - think .

Panelists included Brett Caughran (Fundamental Edge), Andrew Freedman (Hedgeye), and John Belton (Gabelli Funds).

Big thanks to Gabelli School of Business and Fundamental Edge for putting this together. It was one of the most thought-provoking events I’ve attended this year.

Here’s a photo from the school’s trading floor:

All the best to everyone, have a great start to the week tomorrow!

Subscribe now

Share

I closed the OTM (out-of-the-money) short legs with today’s expiration, receiving $900 in credits for the $ONC calendar spread trade, which now will be pushed forward to earnings. It can become a high ROI trade if earnings play out as I expect.

I booked $41,600 profits for my $USAR trade, which was a Dec/Nov calendar spread - the in-the-money leg with strike $21 brought me $31,120, and a short leg with strike $30 brought another $10,480. This trade proved to be one of the most successful of the year, both in terms of structuring techniques and P&L results. I executed this trade back in September and was residually increasing exposure up to .4x of a normal position size, and to maximize the return, I sold the short leg with a strike $40 in October, which wasn’t optimal, as if I hadn’t done that, the long leg wasn’t capped and would have brought more money. But risk management is a priority, especially for trades bringing 500% on premium paid like this.

When I close this kind of massive gains, I also prefer to cut some losing positions or restructure - I closed short on $IONQ opened back in August, booking the -$16k loss, and long $AAPL, having already the short leg closed with a premium earlier but having the long leg losing. I closed the long leg and got the total -$3k loss from $AAPL this month.

My net gains were $23,500 today, turning the monthly results to $31,860.

I opened a new short-term tail risk trade on one of the regional banks, in case more problems are discovered in the banking system during this earnings season.

For the long side, I re-entered $USAR and am thinking about opening new positions with the REE theme.

Happy Friday and Weekend!

Constellation Stocks

Real options trades, portfolio performance, and the process behind consistent 100%+ annual returns

By Iskan

This one marks the release of a new tool to help you stay on the same page with my trading style.

The existing ones are: 1) Substack chat, where I share situational updates on the market and my portfolio; 2) Portfolio Dashboard, which shows the option book structure, options structures initiated, and target returns.

Now, I’m adding the Stock Ideas Pipeline - a structured database that combines a watchlist with the key fundamentals I use to build an option trade.

The database is built around the essential info I look at when analyzing a stock and deciding whether to act.

Pillar I: Trade Info

• Execution Status: whether the stock is already in the portfolio, shortlisted after analysis, or on hold - plus whether it’s a potential long or short.

• Research Status: Backlog, Research Next, or Well Researched.

• Conviction: High, Medium, or Low.

Pillar II: Analysis

• Ticker and Company Name: the object of analysis.

• Trade Story: trade type and logic, helping to define timing and position sizing.

• Tags: for filtering trade themes later.

• Sector & Industry: straightforward.

• Business Commentary: how I see the company’s business and the key trade points.

• FQ Results: highlights from the most recent quarterly report.

• Guidance: what management projects for the next periods.

• Shareholder value: trends in share count and dividend payouts.

• Catalysts: specific events that could move the company’s valuation.

• Risks: factors that could challenge the trade narrative.

• Price Action: notes on the technical setup.

• Price Target: the price level I expect to be reached within a quarter.

• Latest Update: when I last reviewed the company.

More factors might be added later, but the core structure is already there.

I’ll keep migrating my existing research into this database - around 100 companies more to migrate, and I analyze 2–3 new ones daily.

Now we have 3 premium tools available for paid subscribers:

1. Substack chat where I comment on markets and trades.

2. Portfolio Dashboard to track trades I execute in live and monitor my current long/short option book.

3. Stock Ideas Pipeline where I track, analyze, and prepare stock ideas before they turn into trades.

Access links to these tools will be shared in the Chat.

Become a paid subscriber to get one step closer to proficient stock options trading.

Subscribe now

2 more tools are in the works. Once I finish building the analytics that make tracking my strategy easier, I’ll shift focus to educational content helping you master the process behind it.

How is the strategy performing so far?

How is this calculated? (Broker’s information)

We use the daily time-weighted return method to find your rate of return. This method calculates daily value changes, then adjusts for the timing and size of any contributions and withdrawals you made.

Show Example

Alex’s portfolio is valued at $10,000 on January 1. By July 1, the account value has risen to $12,500. Alex then invests $5,000 on July 1, resulting in a new value of $17,500. By the end of the year, the account value has risen again to $20,000.

How would we calculate Alex’s rate of return from January 1 to December 31, considering the contribution made on July 1?

Step 1: Divide the overall time period into sub-periods based on times where Alex contributed or withdrew money.

• Jan 1–Jul 1: Sub-period #1

• Jul 1–Dec 31: Sub-period #2

Step 2: Find the rate of return for each sub-period using this calculation:

((Ending value – net contributions) / beginning value) – 1 = sub-period return

• Sub-period #1: (12,500 / 10,000) – 1 = 25.0%

• Sub-period #2: (20,000 / 17,500) – 1= 14.3%

Step 3: Combine the returns using this calculation:

(1 + sub-period #1 return) × (1 + sub-period #2 return) – 1

• (1 + 0.250) x (1 + 0.143) – 1 = 42.9%

Alex’s daily time-weighted return from Jan 1 to Dec 31: 42.9%

Cumulative and annualized returns

In our example, we looked for the rate of return for an portfolio for one year. The value we found is called a cumulative return.

For time periods longer than a year, we can look for an annualized return. An annualized return is the average rate of return each year. This can be helpful when comparing your performance to market indexes, whose returns are always annualized.

If your time period is longer than 365 days, you can see this number by checking the “Show annualized returns” box. Note: This will not affect the numbers shown on the chart.

Constellation Stocks

Real options trades, portfolio performance, and the process behind consistent 100%+ annual returns

By Iskan

I’m excited to announce the launch of a shared space featuring analytical tools that will enable subscribers to monitor live changes to my portfolio and market view in general.

This will be a shared folder with a set of documents, updated in real time as I make changes.

The first release is today:

Portfolio Dashboard

It includes two key parts:

1. Portfolio Breakdown

• Trades by ticker, linked to long/short side, sector, option structure expiration month, and sizing

  

• Valuation structure: long/short split, sector allocation, total amount allocated, and portfolio analytics

2. Option Trades Structures

• Full list of all trades initiated and currently in the portfolio

• Breakdown of trades by structure type: Single-leg Call/Put, Calendar spreads, or Verticals

• Return calculations: premium paid vs. target option value if the underlying stock reaches my target price

• Risk calculations

These two spreadsheets are the core of my daily operations — and now you’ll have direct access to them.

The biggest value: all data updates automatically whenever I make a change to my portfolio.

More tools will be added soon:

Ideas Watchlist

Corporate Earnings Commentary

Research Library

📌 I will post a link to the shared space in the chat, and it will also be delivered to you by email once you activate the paid subscription.

Why subscribe?

1. We are about to enter Q3 Earnings Season, and much volatility is guaranteed in the market. Options are the only derivative instrument that allows you to benefit from a high-volatility environment.

2. Options are quite sophisticated and require significant time and effort to operate confidently. There won’t be a quick win. At the same time, the way I present the information allows readers to enter the topic effectively.

3. Good pricing for great value. To access this quality, most would need to pay much more in both price and time to reach the desired expertise. Since I share information with practice, understanding the process becomes much faster.

4. Uncrowded ideas that deliver. Last week, I shared 4 hot stock ideas to crush Q4 with 200%+ options return potential, and as of today, one of them, which was mentioned as being in my portfolio, has risen by 60%. The value of the option structures increased by much more.

Constellation Stocks

Real options trades, portfolio performance, and the process behind consistent 100%+ annual returns

By Iskan

It’s designed to help you become a smarter, independent investor with two things:

1. Market-beating stocks in a 5-min read. Picked by elite traders. Delivered weekly to your inbox pre-market.

2. Market, investing, and business insights from insiders and experts outside the mainstream media.

You won’t find the same watered down stock picks like other services. Nor will you find the same regurgitated mainstream media information here.

Money Machine Newsletter

Market-beating stocks in a 5-min read. Picked by elite traders. Delivered every Monday to your inbox before the market opens.

I’ll let Money Machine Newsletter take it from here…

This week’s market, investing, and business insights from insiders and experts outside the mainstream media:

1. Fed policies based on numbers that don’t exist.

2. Obama said stop, Fauci said wait until he’s gone.

3. China builds high-speed rails, we build high-speed bureaucracy.

4. Pirates in Egypt arrested to protect profits in America.

And more. Let’s get to it!

Top Insights of the Week

1. 📊 The Story Isn’t Weak Jobs. It’s Weak Data

• Every month we get a jobs report. Big headlines. Markets react. The Fed makes decisions. Then a month later? Oops, we got it wrong…

  • This past year, 1.2M jobs just disappeared in “revisions.” Gone. Poof. Those hot job reports everyone celebrated? They weren’t hot. They were cold, dressed up to look warm.

  • If any analyst in a job outside Washington screwed up numbers this badly, they’d be gone. But the Bureau of Labor Statistics? They just shrug and call them “revisions.”

• You can’t run a $32T economy with broken data. It’s like trying to drive with a cracked windshield. Sure, you can see something, but good luck making the right turns. The Fed cuts rates based on this stuff. Your mortgage rate depends on it. Your job might too.

• Meanwhile, smart money isn’t waiting around for government reports. They’re looking at credit card data. Payroll numbers. Payment processing. Real stuff, happening right now. They have better information than the people making the decisions. That’s backwards.

• We could fix this tomorrow. Companies like ADP, AmEx, Stripe—they see the real economy every day. Anonymize the data, make it transparent, update it in real time. Instead we’re all flying blind, making trillion-dollar decisions based on numbers that change after the fact.

2. 🦠 COVID Wasn’t Really About a Virus

• It was about trust. And trust broke… Officials knew things privately they wouldn’t say publicly. The lab leak? Real. But publicly? They called it conspiracy theory nonsense. That’s not science. That’s politics wearing a lab coat…

  • Look at gain-of-function research. They call it “studying viruses.” But it’s not studying—it’s making viruses worse. Making them spread faster. Hit harder. The idea was to get ready for pandemics. Instead, they caused one.

  • This wasn’t new to us. We called it out early. Former president Obama paused manipulation of viruses (gain-of-function research). Fauci didn’t agree. He waited for Obama’s term to end and reversed the pause.

• Even our best labs have accidents. Dozens every year. Pretending otherwise is just pretending…

  • Then there’s the money. Pfizer and Moderna put $1.2B into a government foundation. No oversight. Government scientists getting royalty checks they don’t have to disclose. Public safety? Sure. But also private profits.

• People aren’t “vaccine hesitant” because they hate science. They’re hesitant because they got lied to. Once you lie to people, they stop believing everything else you say. Every rule. Every recommendation. Every shot.

• We prepared for the wrong pandemic. We got ready for a virus that spreads. We didn’t get ready for institutions that hide things. Next time won’t just test our medicine. It’ll test whether anyone trusts the people making decisions. And right now? That trust is gone.

3. 👨‍⚖️ Why China Builds and America Argues

• China puts engineers in charge. Chinese President Xi Jinping’ background is in engineering (along with his predecessors). America puts lawyers in charge. In the 118th Congress, 30% of House members and 51% of Senators have law degrees. Everything else flows from there…

  • Engineers build things. They see a problem, they fix it. Need a bridge? Build a bridge. Need rail? Lay track. Need factories? Done. That’s why China can slap down high-speed rail and EV plants while we’re still arguing about permits.

  • Lawyers argue things. They see a problem, they debate it. Write rules. Protect rights. File motions. That’s why we’re great at free speech and terrible at building anything at a fast pace.

• Dan Wang nails this in Breakneck. Chinese provinces compete like business units. Build more, get promoted. Simple. Effective. Until it isn’t. Now they’ve got empty cities and ghost towers everywhere. Turns out you can over-build.

  • We’ve got the opposite problem. We can’t build anything. But almost every project gets sued into oblivion. You can tie up a bridge in court for a decade, but you still can’t drive on it.

• Both sides are half-right and half-wrong. China can engineer buildings but not trust. They can build cities but not fix their birth rate disaster. (Funny how that one-child policy backfired.). America can protect rights but not pour concrete. We can debate forever and get in our own way.

• What happens when one side learns from the other? When America remembers how to build stuff? When China figures out why rights matter? At the end of the day it all comes down to balance. Right now America is tipped way too far to the law side of things versus getting out of our own way and BUILDING.

1. 🏴‍☠️ The Short Shelf Lives Of Piracy Sites

• Streameast, the world’s biggest illegal sports streaming site, was shut down. It drew 1.6B visits last year—even NBA star LeBron James was spotted using it. Two operators were arrested in Egypt.

• Piracy isn’t gone. It’s whack-a-mole. Kill one site, a dozen more pop up. Demand for free sports streams stays high, especially around NFL and MLB seasons.

• This fight isn’t over. If people keep dodging subscriptions, leagues and broadcasters lose billions—and that cost eventually lands on paying fans.

2. 👀 Meta Is Reviving the Nostalgic “Poke” Feature to Win Back Young Users

• Meta is dusting off Facebook’s old “poke” feature. They’ve added counters, a button, and a page to track who poked who.

• It’s a play to win back teens. Only 32% of US teens use Facebook, while TikTok, Instagram, and Snapchat dominate.

• If it works, pokes could become the new streaks. If not, it’s another sign Facebook is aging out while rivals keep the young crowd hooked.

3. 😳 “K-Pop Demon Hunters” Is Hunting Down Netflix’s Most Popular Films

• A korean-inspired animated musical, k-pop demon hunters, just became netflix’s most watched film ever — 236M views in two months, beating Red Notice’s 231M.

• The movie isn’t slowing down. Kids are watching it 6–8 times each, driving steady weekly growth. Netflix also scored its first box office #1 with a sing-along release.

• This isn’t just about streaming. Netflix owns the merch rights, is eyeing oscars, and is already planning a sequel. It’s turning one hit into a multi-revenue franchise.

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Constellation Stocks

Real options trades, portfolio performance, and the process behind consistent 100%+ annual returns

By Iskan

I got a bunch of new subscribers this week. Thank you for deciding to subscribe to my newsletter. Special thanks to our paid subscribers - I’m sure this will be a valuable investment in your learning about the markets.

Who is this project for?

1. Fundamental active investors and traders who would like to enhance their investing process by using option strategies.

2. Passive investors who are seeking new solutions to enrich or hedge their portfolios.

3. Financial market enthusiasts who are about to learn something new and get their place in the market.

I am fairly certain that permanent and consistent readers will level up their understanding of the stock market, a process that involves picking stocks for their portfolios and building option structures to complement their trades.

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Free subscribers: access to occasional posts, paid posts preview, 1-time post unlock, and 7-day free trial.

Paid subscribers: full access to all content published here, Substack chat, and analytical tools like the research library, corporate earnings bank, watchlist, and option structures I currently have in my portfolio.

Content Sections

The Options Playbook: Market and Corporate Earnings Commentary, Specific Company Analysis, Piece of Knowledge.

Portfolio Performance: Monthly Portfolio Performance Update, New Trades Initiating, Risk Management, and Situational Commentary.

The sections are about to be modified soon.

With the introductory section complete, we can move on to the main content.

Market View

Remember, we are in the bull market regime. A cooling labor market could be a concern for the market these days, but not a trigger to reevaluate the recession risks and nor a time for any sort of sell-off.

What can be more real is a pullback and then further going higher.

In case of rapid economic deterioration, I have my short side of a portfolio with fundamentally weak companies.

Corporate Earnings

When you’d like to validate your portfolio position, always refer to the 1-year forward companies’ revenue and earnings projection. This is somewhat what the market anticipates from the corporate world and prices today.

There are 3 ways to do that:

1. Look at the bank analysts’ consensus considering the revision side - whether they increase or decrease it. They usually make it for each particular public company and then pull it up to the whole market.

2. Read the earnings call transcripts of the leading companies in each industry you could be interested in. The management often gives its guidance for the upcoming quarter and year.

3. Look at the leading macroeconomic data that could give you a sense of how this or that industry could be affected by the macro environment.

This is what I usually do on my side when picking the stocks for my portfolio. This is a foundational work.

There are a few recent quarterly earnings results that I found useful to shed light on a particular industry and generate ideas for the Q3 calendar year earnings season.

1. Darden Restaurants #neutral

Sector: Consumer Discretionary

Industry: Restaurants

Report period: Jun-Aug’25, FY Q1’26

The company is focused on the Casual Dining segment and, to a lesser extent, on Fine Dining, which is down.

3 cents miss on EPS catalyzed the stock devaluation, mostly based on cooling down the sales and EPS growth, and more sensitive to cost increase - the company raised the sales outlook but remained the same on the EPS bar.

The crucial thing is similar to what is happening to - decreasing uptick in same-store sales dynamics.

Restaurant-level profit margin got lower over the course.

I’m not a buyer here. This industry is heavily dependent on consumers' spending dynamics and fierce competition.

2. AutoZone #neutral

Sector: Consumer Discretionary

Industry: Specialty Retail (Automotive)

Report period: Jun-Aug’25, FY Q4’25

Showed slowing same-store sales growth, with sales and EPS coming in below consensus. EPS growth for this year has been revised to around 0%.

A weak consumer is a tailwind here, as more drivers repair cars rather than buy new ones. However, expectations of lower credit rates may shift sentiment toward higher new-car purchases, a potential headwind for AutoZone.

I would monitor this company as more evidence about the industry appears.

3. Micron Technology #long

Sector: Information Technology

Industry: Semiconductors

Report period: Jun-Aug’25, FY Q4’25

The thing I liked is that the recent quarter results showed their acceleration, which could be a solid foundation to revise up the next year’s results projection.

Fiscal Q4 2025 delivered record revenue, gross margin, and EPS, all above the high end of guidance, driven by strong pricing, broad-based end market performance, and AI data center growth.

DRAM revenue segment is a tailwind with HBM products for AI implications, leading the trend.

Margins were up across the board. Fiscal Q4 2025 consolidated gross margin was 45.7%; operating margin was 35%; net margin was 31%.

Gross margin guided for Q1 2026 turned even higher - 51.5%.

The company increased its CAPEX plans.

Customer inventory levels were healthy; supply growth for non-HBM DRAM and NAND was below industry demand.

I shortlisted them as a potential Long if I need one for my book in the near term.

4. CarMax #short

Sector: Consumer Discretionary

Industry: Specialty Retail (Automotive)

Report period: Jun-Aug’25, FY Q2’26

Before earnings, I saw the company as a potential long since they delivered better than expected FY Q1’26 earnings results.

In addition, I looked at data from the COX Automotive portal and saw a continuation of upward sales in the used cars market during the summer period. That made me confident in pulling the trigger and putting a 1/4 long position in my portfolio.

But that wasn’t the case - the company reported weaker than expected results both in Revenue and EPS.

Industry in general performed well during the period. That makes me think that the effect is purely company-related. All eyes are on the future and earnings results.

5. Accenture #long

Sector: Information Technology

Industry: IT Services

Report period: Jun-Aug’25, FY Q4’25

The company reported quarterly results better than expected but guided lower sales in the next FY.

In 2026 FY the half of the revenue growth will be supported by M&A activities - that can be a concern for the market.

The company bet on the cybersecurity services niche, where it sees a significant potential for growth.

Margins are fine at the moment. The US business is weak, especially in its Federal segment. The AI revenue segment is growing, but still takes only ~15% of Revenue.

I see here the near-term long as the shares look oversold on fear of disruption by Gen AI products in the consulting field. It seems too early to come to such conclusions.

6. Costco Wholesale #long

Sector: Consumer Staples

Industry: Distribution and Retail

Report period: Jun-Aug’25, FY Q2’26

Strong report - results are in line with consensus, guidance kept strong.

Market reaction could be based on a slight miss on comparable sales and a decline in membership renewals, which was explained as a shift to more e-commerce sign-ups.

Both factors are too minor to justify any significant sell-off.

I would be a buyer here, especially for a longer term. But the stock’s volatility is not high enough to initiate an option structure.

👉 Inside the paywall:

• Crushing Trade Ideas: 4 stocks with 200%+ potential return using option structures

• Portfolio Update: How my portfolio shifted this week

📊 YTD, this strategy is up +102.5% on capital - and these are the actual trades driving that performance.

📩 Upgrade to a paid plan to unlock the full breakdown + access to the private chat.

Read more

Fears about elevated inflation evaporated with the latest data prints.

That suggests last month’s PPI spike was more of a one-time event than the start of a new trend.

Tariffs also didn’t affect the inflation data, for a few possible reasons:

• Companies may want to pass higher import tariffs on to consumers, but demand isn’t strong enough to absorb those price hikes.

• Many goods sold now were imported earlier at lower prices, so the newer, higher-priced shipments haven’t yet hit the shelves.

• Since goods make up only about 30–35% of consumer spending (PCE) and services account for 65–70%, tariff hikes on goods mainly raise goods prices first. But because goods are a smaller share, the immediate effect on overall inflation is limited.

I see “animal spirits” are returning to the market, and we may see bulls pulling stocks higher through year-end.

Of course, nothing is guaranteed in markets, and all eyes now turn to the reaction to Retail Sales and the Fed’s Economic Projections data next week.

Corporate Earnings

Alongside the macro picture, let’s take a look at corporate earnings.

The overall revisions trend remains positive, with estimates for the back half of the year steadily moving higher.

That’s constructive for Q3 earnings season, but it also raises the risk that actual results could fall short. Put differently, expectations may now be running ahead of reality.

The chart below shows Q3 2025 expectations in the context of results from the prior four quarters and what’s currently projected for the next three.

Read more

This is a conversation space exclusively for subscribers - kind of like a group chat or live hangout. I’ll post questions and updates that come my way, and you can jump into the discussion.

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3. That’s it! Jump into my thread to say hi, and if you have any issues, check out Substack’s FAQ.

September began with weak ISM Manufacturing PMI data for August. At this point, such weakness feels almost routine - it’s been happening for months.

One detail I paid close attention to: New Orders flipped from contracting to growing. That’s a positive sign but one month of improvement isn’t enough to establish a trend. It could just as easily flip back. For now, nothing fundamentally new for the markets.

This data pairs well with the Logistics Manager’s Index released the same day. Companies built up solid inventories in August and weren’t in a hurry to replenish them.

Meanwhile, job openings confirm a cooling labor market.

I expect more volatility once we get fresh data on business and consumer health - the ISM Services PMI and employment data due tomorrow and Friday will be key.

My L/S Stock Options Portfolio Positioning

I’m working to keep my long/short options book aligned with potential outcomes the financial markets could face this quarter.

Scenarios I’m watching:

1. Rotation.

   From AI hardware-driven industries toward software (previously pressured by AI replication risks) and defensive sectors like Consumer Staples and Healthcare. In this case, the broad market could be slightly lower or flat in September, then push higher into year-end. That keeps us within a bull market framework.

2. Fear of recession.

   If labor market deterioration accelerates and rate cuts fail to stabilize conditions, consumer discretionary spending will stay weak. This could trigger a correction across most sectors.

3. Sticky inflation.

   Inflation holding steady in its current range wouldn’t necessarily hurt markets - as long as corporate profits remain intact and consumers stay resilient.

Right now, I see a mix of scenarios 1 and 3 playing out, and I’m managing my portfolio accordingly.

👉 Inside the paywalled section:

• Full long/short options portfolio (tickers, position sizes, expiries)

• Detailed reasoning behind each trade

• The sectors I see as the next volatility catalysts

📊 YTD, this strategy is up +102.5% on capital - and these are the actual trades driving that performance.

📩 Upgrade to a paid plan to unlock the full breakdown

Read more

📉 August closed with –$12,674 net loss on 17 trades.

✅ 6 winners averaged $8.8k; ❌ 11 losers averaged –$6k.

⚖️ Winner/Loser ratio: 1.47x with only 1/3 profitable trades.

🎯 Breakeven possible with a ratio near 2x or a few more winners.

📊 YTD: +$200k realized returns (102.5% on capital).

⚡ Core lesson: balance longs and shorts, pick trades with strong volatility profiles, and act early to fix or restructure.

Hi everyone,

Happy Labor Day!

August was a hard month with quite low volatility.

I executed 17 trades:

• 9 longs (call structures)

• 8 shorts (put structures)

Performance breakdown:

• ✅ 6 winning trades → +$53,028

• ❌ 11 losing trades → –$65,702

• Net P/L: –$12,674

This highlights the beauty of options trading: you can still win even with fewer winners than losers.

• Average winner: $8.8k

• Average loser: –$6k

• Winner/Loser ratio: 1.47x

• Only 1/3 of trades were profitable

If I had pushed the ratio closer to 2x or added just one or two more profitable trades at my average win size, August would have been breakeven.

⚡ Golden rule in options trading: You can be wrong more often than right - but if your winner/loser dollar ratio > 2x, you’ll make money over time.

August option contracts exposure is shown by the month of trade entry in columns:

What dragged performance down was the lack of high-volatility ideas.

My winners and didn’t have enough volatility in their profiles. In options, selecting trades with the right volatility is always crucial.

I also carried and trades from May that I eventually wrote off. In hindsight, it would have been better to fix or restructure them earlier.

YTD Performance

Overall, 2025 has been favorable.

I’ve generated around $200k realized returns, equal to a 102.5% return on capital under management.

Breakdown by strategy:

• Calls: Efficiently captured the market rebound in July.

• Puts: Benefited from the April tariffs-related volatility spike.

Why Long / Short Portfolio

At their core, options let you make non-linear returns on stock price movements and volatility.

But here’s the trap: if you only hold one-sided trades (say, a bunch of long calls on different stocks) and the market turns against you, all those premiums paid can expire worthless.

The solution is balance. By combining longs and shorts, and by carefully selecting stocks and option structures, you can build a portfolio where winners outweigh losers and the system works over time.

More in the Options Playbook

Alongside these monthly performance reports, I also share real-time trade actions and market views in the Options Playbook section of this newsletter.

👉 Consider becoming a paid subscriber to access everything and stay aligned with my trading journey.

Subscribe now

You can also check the About section for more on me and the project.

📘 All subscribers receive a free guide with theory and practical cases in stock options trading.

This week’s potential volatility triggers include:

Tuesday: Durable Goods data is just okay

Looking forward to and earnings reports tonight.

Wednesday: earnings releases.

Thursday: European economic data and earnings releases.

Friday: PCE and Michigan Consumer Sentiment.

The Nvidia earnings report could be especially impactful - not only for AI-related industries but for the broader market as well. PCE is the second major factor, though July’s data doesn’t seem likely to introduce much uncertainty.

Looking ahead, all eyes are on jobs and inflation data in early September. That will likely set the tone for how the “music” continues to play.

We’re in a transition phase with plenty of uncertainty, and my book is positioned accordingly:

• Digits in brackets → position size (1 = full size).

• Colors → options contract expiration classification by month.

There are a few potential levers I’ll pull more aggressively once the market shows direction:

• If growth data holds up, I’ll increase exposure to growth stocks, like and

• If economic growth weakens, I’ll add to the short side and

• Other trades are a core of my book and remain in place to keep it stable through market drift.

👉 Subscribe to my newsletter for timely insights into Stock Options Trading.

Learn more about me and the project in the About section.

📘 All subscribers also receive a free guide with theory and practical cases on stock options trading.

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