I had just graduated from the University of Miami — sun still on my skin, confidence in my step — and Chicago was calling louder than any beach could. I wasn’t chasing an office job with a cubicle and a steady paycheck. I wanted the real thing — the noise, the chaos, the chance to test myself in the fire.
So I walked into the Chicago Mercantile Exchange for the first time that summer.
The smell hit me first: sweat, paper, and burnt coffee. Then the sound.
A wall of voices shouting bids and offers, phones ringing, bells clanging. Paper tickets flew through the air like confetti. It was a storm in every sense of the word.
I was just 22 years old, standing shoulder-to-shoulder with men two and three times my age who had been trading longer than I’d been alive. I was nervous and my tie was a little too tight, but I knew I was exactly where I wanted to be.
I didn’t know it then, but those first steps onto the floor would shape everything that came after. That was where I learned what really separates traders who survive from traders who wash out.
That’s where I learned The Trader’s Mindset.
Building Our Framework
Even when you think you’re ready for the challenge, you find out quickly that there’s still a lot left to learn.
Any trader can catch a lucky break here and there, but on the floor you can’t survive on luck alone. You need process. You need conviction. You need discipline. These are the core principles traders fall back on when the waves come crashing in that keep us calm, cool and collected.
It all starts with process. If you can’t explain why you’re in a trade, you don’t belong in it. This isn’t a gut feeling we get from some squiggly lines on a chart, we’re on the hunt for objective reasons to believe that an asset is mispriced. This can take a lot of forms.
Sometimes it’s as simple as following some unusual options activity (UOA), or spotting mispriced earnings volatility. Maybe we find a divergence between two highly correlated assets. We’ve also had success with special situations like KTOS and combat drones, QXO consolidating the retail building supply space, and more recently with mispriced stocks like BMNR with large Ethereum holdings.
But even the most thorough process doesn’t spare you from the ups and downs of the market. Nothing moves up or down in straight lines. A trade can look perfect on paper and not go the way you expected. That’s where conviction steps in — the belief born from research and preparation that allows us to remain confident when things don’t go as planned. Without conviction, process is just theory.
Think of conviction like a heavy fin that runs along the bottom of a sailboat — the keel.. Most people don’t think about it because you never really see it, but it’s the reason the boat doesn’t tip over when the waves slam against the sides. The waves are going to batter you no matter what — you can’t control that. But the keel keeps you upright. Without it, you’re tossed around until you capsize. With it, you can ride out the chop, even when the deck under your feet feels like it’s sinking.
While conviction is what carries us through the rough patches, it’s even better if you can avoid them altogether. That’s where discipline comes in.
Discipline is about setting the rules of the trade before you even put in your first offer. I’ve seen plenty of sharp traders self-destruct. And in every case, they would make the same mistakes…
They would rely too heavily on technical analysis. They let excitement push them into chasing hot trades and oversized bets. They would micromanage their portfolios. They would break their own rules. In the long run, the market will punish you for that kind of recklessness.
Discipline is the patience to wait for your setup, even when the market feels dull and your inner voice is screaming for action. It’s the ability to hold back when a stock is ripping higher and it’s too late to jump in. It’s the humility to admit the story has changed. So you step aside – even if you want to be right.
Discipline is what creates consistency. It’s not glamorous, it doesn’t get applause — but it’s the framework that allows us to fine-tune our approach to the markets. Without it, you’re just swinging at every pitch that comes your way. With it, you’re ready to defend the strike zone and stay at the plate long enough to capitalize on the right opportunity.
Process in Action
Now that you have a better understanding of the trader’s mindset, let’s take a look at one real world example that brings it all together.
I’ll take you through our recent Lyft (LYFT) trade step by step. It’s a clean example of how process, conviction, and discipline all come together.
Back in July, we took aim at Lyft Inc. The company was getting set to release its next earnings report on August 6.
We came into earnings with a simple observation: the options market was underpricing the move. The straddle was implying around a 16% swing, but Lyft’s history told us the stock typically moved closer to 20% after earnings. Even better, we also saw that LYFT has been lagging behind its top competitor UBER, which gave us conviction that LYFT still had room to catch up.
That’s the edge. We weren’t guessing. We weren’t saying, “Hey, I think ridesharing is hot.” We were playing the math and had multiple reasons to believe that LYFT had potential to move.
With catalyst events like an earnings release, we never know for certain whether the stock will go up or down.
So, instead of making a directional play, we trade the volatility. In this case we structured the trade as a straddle — buying calls and puts on the same strike and same expiration. This way, we didn’t need to worry which way Lyft would break. We just needed it to move more than the market was pricing.
Discipline Over Emotion
Then earnings hit. Lyft sold off on the news, but not far enough outside of the market maker’s expectations. In this case that meant we were able to take profits on our puts, but it wasn’t enough to cover the total cost of the strangle. Meanwhile the calls were close to worthless, which put us in a tight spot.
A lot of traders see red on one side of their trade and panic. It would be easy to cash them out to try and preserve and claw back some more premium, but as a general rule, we never want to sell an option for less than $0.20. Even if we did, we would still be underwater on this trade.
On the flip side, we could hold onto the calls and see if shares recovered in the nine days before expiration. The situation didn’t look good, but this is where conviction and discipline come into play.
We knew the research. Sure, the earnings catalysts didn’t pan out. But that wasn’t our only reason to believe LYFT could move to the upside. That conviction in the trade and the discipline in our approach kept us from second-guessing the setup when the stock went against the calls.
Conviction Rewarded
And then, right at the last minute, the payoff came. On Friday, LYFT started moving after announcing its co-founders Logan Green and John Zimmer were stepping down from the board next year. That means their Class B shares will turn into common stock, killing the dual-class structure and bringing our calls back from the brink. As a result, shares jumped more than 10% and brought our calls back from the brink.
All told, the straddle returned around 5%. Not a barnburner, but a win built on process, conviction, and discipline.
Trades don’t always play out cleanly right after you put them on. A lot of the time, they test your patience. LYFT is a great example.
We didn’t chase. We didn’t guess. We didn’t let emotions drive the bus.
We found a setup with edge, trusted the research, and managed risk with discipline. That’s the trader’s mindset in action — and that’s how you stay alive long enough to hit the big ones.
And this isn’t the only comeback story we’re seen in the past few weeks.
We saw rallies in iShares Russell 2000 ETF (IWM), Alcoa Corp. (AA) and Sunrun Inc. (RUN) that looked all but lost only to rebound and take what looked like a surefire loser into the green.
The lesson in all of these is simple: don’t mistake short-term noise for a verdict on your trade. If your process is sound and your discipline is intact, you don’t have to flinch when a position goes red. The market will test you — it always does. It’s about trusting the framework you’ve built, leaning on conviction when the waves hit, and letting discipline decide the exit.
Train Your Mind to Think Like a Pro
The truth is, no one is born with the trader’s mindset. It isn’t some gift you’re handed when you open a brokerage account or read a book. It’s forged in the fire of real-world trading decisions — like the ones we just walked through with Lyft.
But here’s the thing: you don’t have to spend years on a trading floor to build it. That’s exactly why I created the Masters in Trading Options Challenge.
Over the course of this program, I walk you step by step through the same framework I’ve relied on for nearly three decades — the same one that kept me steady when trades went against me, and the same one that’s helped thousands of others trade with clarity and conviction.
From that major victory trading an Ethererum ETF that wasn’t on anyone’s radar…
To our massive wins in stocks I mentioned like TMC (a play on deep-sea exploration) and QXO (builder consolidation)…
Masters in Trading has consistently delivered unique setups with massive upside potential. And the Masters in Trading Options Challenge is designed to show you exactly how we pulled off those trades with conviction, process, and a strong approach rooted in the fundamentals of options trading.
You can click here to learn more and sign up for The Masters in Trading Options Challenge.
Remember, the creative trader wins,
Jonathan Rose
Founder, Masters in Trading
