How to Avoid a Complete Wipeout During a Historic Sell-Off

by Chris Pulver | Jun 10, 2026

🚨 I’ll be live at 9 a.m. ET🚨

We’ll cover Tuesday’s roller coaster volatility that included a swing of more than 4% from highs to lows, the intraday V-bottom rally, multiple winners, inflation numbers on deck, SpaceX on Friday and more [tap to join us for the Daily Profit Plan]!

Friday delivered one of the most statistically extreme intraday moves we’ve seen in years — a full three-standard deviation sell-off.

To put that into perspective, you typically see something like this about 2% of the time. Even before the drop accelerated, volatility was exploding. The VIX jumped roughly 40% in a matter of hours, ripping from around 15 to 21.

When volatility expands that fast, everything becomes more expensive, more chaotic and far less forgiving for traders and risk managers.

But volatility alone wasn’t the story. What mattered was how the day played out across multiple strategy buckets. I had trades working in Flashpoint, Engineered Options and several short-duration structures, and the sell-off was so violent that two defense trades that sat untouched all week finally filled.

That never happens in normal conditions — but it reinforces why I always build layered protection into the entire portfolio, not just a single position.

That preparation is what kept things under control. Instead of taking a catastrophic hit, I walked away with a small, manageable loss on the day.

The Three-Tier Defense That Kept Me Alive

The first line of defense was the Daily Profit Play — a standard iron condor designed for normal intraday flow. The second layer was a defense trade sitting around a key level that widened my break-even zone by about 25 points. That helped, but it wasn’t built for a 3-standard deviation plunge.

The final layer was the inexpensive hedge — an out-of-the-money (OTM) butterfly that cost just 50 cents to put on. That structure became the hero. By the end of the session, it was showing up to $14.00 in credit, so $1,400.

And just to be clear, the hedge wasn’t guesswork. The placement came from measuring prior extreme single-day sell-offs and targeting the historical 2.5-3% downside zone. It was based on where markets typically exhaust on those kinds of days.

That round-number area simply aligned with where a disaster hedge needed to sit.

Even so, the final minutes were frustrating. At 3:56 and 3:57 p.m. ET, the market was sitting right at the pin price. With a 30-wide butterfly, the theoretical max profit was around $29.50, yet the market was only offering about $14. Liquidity tightened dramatically — typical dealer behavior after a shock move — but I wasn’t going to push my luck.

I took $950 off that hedge before conditions got any more unstable.

Managing Risk When the Market Is Running on Air

Big down days often have a “running on air” feel — almost like that Wile E. Coyote moment where the market keeps charging forward even though the ground underneath is gone.

That’s why having multiple layers of protection matters. On days like this, you can’t rely on a single setup or hope for perfect timing. You have to think like a dealer, especially when liquidity dries up.

After a move this large, market makers often keep prices tight while implied volatility jumps. It becomes harder and more expensive to adjust, which is exactly why hedges need to be placed before the event, not during it.

I had roughly $2,800 of max risk on the table across the portfolio. If I’d frozen or let emotions take over, the hit could’ve been brutal. Instead, I handled each bucket independently and used real-time probabilities to make decisions.

For example, on one structure I could take about $90 immediately or hold for roughly a $100 max gain with about a 75% chance of finishing at full profit. On a normal day, that’s an easy hold. On a three-standard deviation day, with volatility blowing out, taking the high-probability smaller gain made more sense.

I also closed the Daily Profit Play for a $0.11 loss to avoid about $400 of additional risk, and took a $300 hit on a broken wing butterfly. But that wasn’t emotional trading — that was controlled damage management.

No revenge trades, no chasing. I took the medicine early, reset and protected the account for the next session.

The result: Instead of a disaster, I ended the day only a few hundred dollars down. Considering the scale of the move, that outcome is a win.

And the bigger picture is even more important. The approach that saved me isn’t something I invented on the fly. It’s been tested for more than 11 years across 543 trades with a 97.1% win rate and roughly 17–20% average returns. It has already produced a perfect track record this year. Days like Friday are exactly why those defensive rules exist — because the market doesn’t care how comfortable we feel.

This is also why I tell traders not to be a “one-trick pony.” If you rely only on buying calls or buying puts, you’ll eventually collide with a day like this and get punished. Risk-defined spreads and layered structures are designed for uncertainty. They don’t require perfect direction — they just need disciplined execution.

I’ll see you in the markets.

Chris Pulver
Chris Pulver Trading

Follow along and join the conversation for real-time analysis, trade ideas, market insights and more!