Nearly every conversation moving through the Maverick community right now circles back to the same word: bubble. Nobody claims to know the timing, but a lot of people are convinced that the AI trade eventually corrects — and they want to know how to be positioned when it does.
Broadly, there are three instincts. Close your eyes and ride it out. Build a larger cash position. Or bet against it outright. This piece is about that third instinct — shorting the market, usually through put options — and, more honestly, about all the ways it can quietly go wrong. We sat down with Dan Eastman, CFA of Shorecrest Capital to walk through what puts actually are, and mostly, how people get burned trading them.
Puts and Calls, Plainly
Start with the two building blocks. A call is the right to buy an asset at a set price by a set date. A put is the mirror image — the right to sell an asset at a set price by a set date. Both are contracts, not obligations, and each one has two sides: for every buyer paying the premium, there is a seller collecting it. When you open your brokerage screen, that is the first choice you are really making — are you paying cash out, or taking cash in?
If your thesis is that a stock or index is heading down, the put is the natural tool. You pay a premium today for the right to sell at your chosen “strike” price before the contract expires. If the market falls far enough, that right becomes valuable. If it doesn't, the right expires worthless.
A Put Is Just Insurance
The cleanest way to think about a long put is as an insurance policy on a position. You pay an upfront premium. In return, you get the right to benefit if the price falls below a certain level, for a limited window of time. And, like any insurance, three things are always in play at once: the price it falls to, how far it falls, and how soon.
Two mechanics catch newcomers off guard. First, one contract represents 100 shares — a chain quotes the premium per share, so a quote of, say, “11.33” is really about $1,130 for the contract. The easy shortcut: move the decimal two places. Second, your break-even is not the strike price. It's the strike minus the premium you paid.
So a put doesn't start paying the moment the market dips below your strike. The market first has to fall past the strike and cover what you spent on the contract before you see a dollar of profit. The good news, and it is real: your maximum loss is fixed. Buy a put for $150 and the worst case is that $150. That is the crucial difference from outright short-selling, where losses have no ceiling.
The Trap: You Can Be Right and Still Lose
Here is the part almost nobody mentions until it has already cost them money. You can be correct about the direction, correct about the timing, and still lose — because of what you paid going in.
Options aren't priced by simple arithmetic. Baked into every premium is implied volatility — the market's collective bet on how much the asset is likely to move. When fear is already high, protection is already expensive. Buy an expensive put, watch the stock fall exactly as you predicted, and you can still come out behind as that inflated premium deflates. Traders call it volatility crush, and it is one of the most demoralizing outcomes in the game: right thesis, red account.
A back-of-the-envelope way to sanity-check what the market is already pricing in is the expected move:
It won't tell you which direction — only the size of the swing the crowd is paying for. If a stock at $100 has an expected move of $30 over your window, the market is already braced for a move to $70 or $130. If your own thesis is only a 15% decline, you'd be overpaying for a far bigger drop than you actually expect. Being early to a fear that's already priced in is just another way to lose.
Reading the Chain: A QQQ Walkthrough
On the day we recorded, the Nasdaq-100 ETF (QQQ) was trading around $716. Pull up the option chain and a few things orient you. The strike nearest the current price is your reference point. There's a bid (what you can sell for) and an ask (what you pay to buy) — the gap between them is the dealer's spread. And the further out in time you go, the more you pay: a near-the-money, long-dated put can cost tens of dollars per share precisely because you are buying a lot of time and a lot of proximity to the current price.
The community's actual use case isn't nickel-and-diming the edges — it's insurance against a large drawdown. If the thesis is “protect me if this thing drops 25–30%,” you look further down the chain, at cheaper, lower strikes. Those cost far less per contract. And if a big, fast decline genuinely arrives, out-of-the-money puts can multiply in value — but only if the move is large enough and quick enough. Most of the time, it isn't, and the premium simply erodes.
To judge whether protection is cheap or expensive right now, watch the volatility read-outs — things like IV rank and the 52-week IV percentile. When implied volatility sits low relative to its own history, options are relatively cheap — a better moment to be a buyer than a seller. When it's elevated, you may simply be late; others got scared first and bid the price up. There's even a “volatility smile” in fearful markets, where puts cost more than comparable calls because everyone is reaching for the same protection at once.
Usually, the Boring Answer Wins
Here's the punchline from someone who trades this for a living: for most people, the simpler tools are the better ones. If you're worried about a drawdown, you can trim equity exposure, raise your cash cushion from, say, 5% to 10%, or rotate toward sectors that tend to hold up in bad times — healthcare, financials, or hard assets like gold. You can short an index directly, but be warned: that path has no loss ceiling, and if the market rises against you, your broker will demand you top up the account.
Options can absolutely play a role — a modest, well-understood put position can buy real peace of mind. But the professionals who make markets in these contracts spend enormous resources getting the probabilities right, and you never know who is on the other side of your trade. The honest guidance is to keep any options position small, treat the premium as money you can afford to lose entirely, and leave the heavy machinery to the firms built for it.
Where We Sit
This is where our own posture matters, because we don't ask the community to do anything we wouldn't. Our capital sits largely in hard, productive assets — not in the hyperscalers or the semiconductor names likely to be at the center of any AI unwind. We don't expect to be in the part of the market that gets crushed. But we're clear-eyed that a real liquidity event drags everything down for a while, gold included, and that's a discomfort worth planning for rather than pretending away.
So if a small put position helps you sleep — a bit of “funny money” protection so a market crash stings a little less — there's nothing wrong with that, done with eyes open. What we'd steer anyone away from is wagering a meaningful slice of net worth on getting the direction, the size, and the timing all correct at once. That's not a plan. That's a coin toss with a countdown clock.
You can be right about the direction, right about the timing, and still lose money. That alone tells you how much respect this game deserves.
Prudence over prophecy. Position for the storm, but don't bet the harbor on when it arrives.
Disclaimer: This article is provided for educational, informational, and entertainment purposes only and does not constitute investment, legal, tax, or financial advice, nor a solicitation or recommendation to buy or sell any security, option, or other instrument. Options trading involves substantial risk, including the total loss of the premium paid, and is not suitable for all investors. Any securities, strikes, prices, or figures referenced are illustrative examples drawn from a single point in time and are not recommendations. Past performance is not indicative of future results. CI Mavericks Advisory Services is not acting as your fiduciary or advisor through this content. Consult your own licensed financial advisor, accountant, and attorney before making any investment decision.