Options Strategy Performance in Q4 2025: Lessons from High-Conviction Trades

The fourth quarter of 2025 delivered a mixed bag of outcomes for options traders, offering critical lessons on strategy execution, market dynamics, and risk management. By dissecting the success of the Intel (INTC) Covered Combination, the failure of the QQQ covered strangle, and the partial success of the Wheel strategy on Workday (WDAY), Robinhood (HOOD), and SoFi (SOFI), we can extract actionable insights for 2026 trading.

Intel's Covered Combination: A Masterclass in Precision

The Covered Combination (or Covered Strangle) strategy on Intel in Q4 2025 exemplified how disciplined execution and favorable stock fundamentals can yield exceptional returns. On October 2, 2025, an investor purchased 100 shares of INTC at $37.30 and sold an out-of-the-money (OTM) $50 call and a $30 put, generating $99 in premium income. By October 31, INTC had risen to $39.99, allowing the investor to retain the $61 premium from the call while the put expired worthless. The total profit of $368-comprising a $269 gain on the shares and $99 in premiums-translated to a 69.2% annualized return.

This success hinged on Intel's strategic momentum at the time. The company's advancements in its 18A node process and Panther Lake architecture bolstered investor confidence, while broader market dynamics temporarily favored semiconductor stocks. However, post-October, INTC's price declined, underscoring the importance of timing and the risks of relying on short-term momentum in a competitive sector according to market analysis.

QQQ Covered Strangle: A Cautionary Tale of Overexposure

In contrast, the QQQ covered strangle-a high-conviction trade involving the Invesco QQQ Trust-ended in underperformance, highlighting the perils of overexposure to volatile assets. A long-dated covered strangle in Q4 2025 involved selling a $800 call and a $480 put against QQQ shares, with the expectation of limited price movement. However, QQQ's Q4 performance was marred by a sector rotation away from tech and heightened volatility. In November 2025, QQQ recorded a -1.58% total return, underperforming the S&P 500's 0.25% gain, as its 64.86% Technology sector weighting dragged returns lower according to QQQ monthly insights.

The strategy's failure was compounded by macroeconomic uncertainties, including Federal Reserve rate cut speculation and AI valuation concerns. For instance, heavy put activity on the $575 strike expiring March 31, 2026, revealed investor anxiety about downside risks. The QQQ case underscores the need for dynamic risk management in high-beta ETFs, particularly when market leadership shifts rapidly.

Wheel Strategy on WDAY, HOOD, and SOFI: Partial Success Through Discipline

The Wheel strategy-selling cash-secured puts and covered calls to accumulate stocks while generating income-showed mixed results on WDAY, HOOD, and SOFI in Q4 2025. Puts on these stocks were initially out-of-the-money by 16.4%, 11.5%, and 9.6%, respectively, enabling premium income without immediate assignment. The strategy generated a 16.4% annualized return, driven by disciplined execution and a focus on stocks with long-term conviction according to trader analysis.

However, partial success was tempered by market volatility and liquidity constraints. For example, HOOD's shares faced downward pressure due to regulatory scrutiny, while SOFI's recovery from insolvency remained fragile. Traders noted that journaling every trade improved discipline but could not fully offset adverse price movements as reported in trading forums. This highlights the importance of balancing income generation with rigorous stock selection and risk mitigation.

Actionable Insights for 2026 Options Trading

1. Leverage Sector-Specific Fundamentals: The Intel case demonstrates that Covered Combinations thrive when applied to stocks with clear catalysts (e.g., product launches, process advancements). Traders should prioritize companies with strong earnings momentum and limited downside risk.
2. Avoid Overexposure in High-Volatility ETFs: The QQQ failure underscores the dangers of relying on static strategies in volatile markets. For ETFs like QQQ, consider shorter-dated options or hedging with protective puts during periods of macroeconomic uncertainty.
3. Refine Wheel Strategy Execution: Success with the Wheel strategy requires strict adherence to risk parameters. Focus on stocks with stable fundamentals and avoid over-leveraging in speculative names. Journaling trades, as noted in Q4 2025, remains a critical tool for maintaining discipline.

Conclusion

Q4 2025's options strategies offer a blueprint for both triumph and caution. Intel's Covered Combination rewards precision and timing, while QQQ's underperformance warns against complacency in high-beta assets. The Wheel strategy's partial success reaffirms the value of discipline but also highlights the need for adaptability. As 2026 unfolds, traders must balance conviction with flexibility, ensuring that strategies evolve alongside shifting market dynamics.