Skew

Two strategies can earn the same return on paper and feel nothing alike. Skew is the shape of that difference — the part your Sharpe ratio and standard deviation can't see.

Negative skew (selling cash-secured puts or covered calls) means many small wins and a few brutal losses: pennies in front of a steamroller. Positive skew (buying OTM calls or LEAPS) means many small losses and the occasional moonshot: lottery tickets that sometimes hit.

The interactive simulator drives the point home. Aim to sell puts at 2%/week and the typical month still reads about +9% — but the rare crash grows so large that the realized average turns negative, and roughly 85–90% of accounts peak and then collapse over two years. That inversion is the whole lesson: over-aggression on negative skew borrows from a future that eventually collects.

You can check any asset's skew yourself: plot its monthly returns and look for a longer tail on one side, or paste the returns into a spreadsheet and use the SKEW() function — a negative number means negative skew, positive means positive, near zero is symmetric. Then act on it: size for the rare tail rather than the calm average, and pair a little cheap positive skew against a negative-skew income book.