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When should I stop selling options for a while?

Pause new trades when your account falls past a limit you set in advance, or when you notice yourself breaking your own rules. A pause isn't quitting. It's how you keep a bad stretch from getting worse.

Options guide · 8-minute read · Updated 2026-10-26

The short answer

Stop opening new option trades when one of these happens:

• Your account falls past a drawdown limit you wrote down before you started.
• You break your own rules more than once in a short stretch.
• Something outside trading is taking your attention: health, work, family, sleep.

You don't have to close what's already open. A pause means no new trades while you manage the ones you have. Then you come back slowly, on a schedule you set now, not in the moment.

What a drawdown limit is

A drawdown is how far your account has fallen from its highest point. If it peaked at $20,000 and now sits at $18,000, you're in a $2,000 drawdown.

A drawdown limit is a line you set in advance. When the account crosses it, a rule kicks in. The rule is set while you're calm, so it can protect you when you're not.

Losses also get harder to win back as they grow. A 10% fall needs the account to grow about 11% to get back. A 20% fall needs about 25%. A 50% fall needs 100%. That's why the line should come early.

One way to set the limits (an illustration, not a trade idea)

Here's a sample set of limits for a $20,000 account running the wheel strategy. Pick your own numbers. Write them in dollars.

These are examples, not a standard. A smaller account or a nervous temperament might set them tighter. The point is that they exist, in dollars, before you need them.

Why the pause helps, in numbers

Say the account peaked at $20,000. A rough few weeks took it to $17,800. That's −$2,200, past the 10% line.

You have two paths.

Push-on looks better when things steady: $200 more. When the market falls again, it costs $1,100 more than pausing. You're risking a lot to gain a little, at the exact moment you trust your judgement least.

That's the whole case for a pause. The downside of waiting is small. The downside of pushing is big.

Signs you need a break that aren't a number

Drawdown isn't the only signal. Pause new trades if you notice:

• You broke a rule twice in a month. A strike below cost you didn't plan, a trade off your list, a put without full cash.
• You're checking positions all day. Or you can't sleep because of one.
• Your "Why today?" answers are thin. "Felt like it", "cash was idle". See selling options because you're bored.
• You want to make back a loss quickly. That's the clearest sign of all.
• Life is loud. A new job, an illness, a move. Trading takes calm attention.
• The market is in a panic you don't understand. It's fine to sit out until you do.

None of these is a failure. They're facts about the moment. The rule just says what you do about them.

The pause rule

Write this in your journal now, while things are calm:

1. What starts a pause: my drawdown line of $___, or two broken rules in a month, or any of the signs above.
2. During a pause: no new trades. I manage what's open with my normal rules. I don't roll to avoid a loss I'd otherwise take.
3. How long: at least two weeks, or until the next calendar month, whichever is later.
4. What I do instead: review every trade in the drawdown. Our page on reading your journal after a losing trade has the questions. Paper trade the next idea.
5. How I come back: one position at half my normal size. If it goes by the rules, the next month at full size.

Step 5 is the one many people skip. Coming back at full size, all at once, is just pushing on with a short delay.

What a pause isn't:

• It isn't selling everything in a panic. Open positions still get managed calmly.
• It isn't a punishment. You didn't do something wrong by losing. Losses are part of selling options.
• It isn't forever. It has a set length and a set way back.
• It isn't a reason to switch strategies. Wait until the pause ends before you decide anything big.

If the drawdown came from one large assignment, our page on recovering from a big assignment loss has the next steps. For the month-level picture, see what a bad month looks like.

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