Market Movements

^{*Weekly Return is calculated as market open of the previous Wednesday, to market close this Tuesday (yesterday); Current Level is Tuesday’s (yesterday’s) close.}

Weekly Watch

• The usual “Strait of Hormuz” headline remains a key market watchpoint. A deal feels close, even as they continue to exchange blows.

• Wall Street’s mood flipped fast in May. BofA’s fund manager survey showed a massive rotation back into equities, AI, and large-cap growth stocks, while portfolio cash levels remained below the bank’s historic contrarian “sell signal” level of 4%.

• Semiconductor and AI names continue seeing meme-era levels of call-option speculation. Retail call activity in top tech names now exceeds 52% of opening volume (highest since 2021) as traders chase upside in leaders. Even despite elevated valuations and potential macro risks from yields and energy prices.

• Basically, is sentiment too hot?

Thought Throttle

There are a lot of moving parts in options selling. Greeks, volatility, earnings, macro, liquidity, timing, etc. (and much, much more jargon).

Because of that, I think many option sellers end up focusing too much on finding the “perfect” trade, instead of improving the smaller parts of execution that quietly compound over time.

Many times, the difference between a decent options seller and a consistently profitable one is not necessarily intelligence or prediction ability.

It’s usually process.

This week, I wanted to cover 3 small adjustments that I think can meaningfully improve option entries over time.

To be clear, this is after we’ve already checked the fundamentals of the underlying itself. In other words, we know the business doesn’t suck.

1. Wait for Red Days to Sell Puts

This is one of the simplest adjustments option sellers can make.

Even a light pullback in the underlying stock will often expand premiums while simultaneously lowering the strike prices we may be comfortable selling.

In other words, we can potentially collect more premium while also improving our effective purchase price.

This doesn’t mean waiting forever for the “perfect dip.”

It just means avoiding emotional entries on large green days when enthusiasm and momentum are already elevated.

Patience tends to get rewarded in options selling.

(We could even remove “in options selling” from that sentence. Patience tends to get rewarded.)

2. Avoid Illiquid Expirations

Not all premium is equal.

Far-dated expirations, odd strikes, and smaller names can sometimes show attractive premiums, but poor liquidity can quietly eat away at returns through bad fills and difficult exits.

Wide bid-ask spreads are essentially friction.

This is one of the reasons many experienced option sellers stay within highly liquid underlyings and commonly traded expirations.

The ability to efficiently enter, adjust, or exit a trade matters more than many newer traders realize.

3. Don’t Force an Options Trade

Sometimes the best option trade is no option trade.

There are stocks that may be perfectly fine investments, but poor options vehicles.

Maybe the spreads are too wide. Maybe the open interest is weak. Maybe the premiums are too inconsistent to justify the obligation.

In those situations, it can make more sense to just buy shares outright instead of trying to force an options strategy onto the position.

Not every stock needs to be wheeled, lol. The goal isn’t to use options at all times.

The goal is to use them where they actually improve the position.

So, to wrap this up…

The longer I’ve followed markets, the more I’ve realized that small decisions stack up.

A thousand golden BB’s, no silver bullets.

Better timing. Better liquidity. Better selectivity.

Slightly improving the odds and reducing unnecessary friction over a long enough time horizon.

That’s usually where the coveted consistency comes from.

Thanks for reading this week’s edition. Stay disciplined, and best of luck.

Quote(s) I Like

Trade Mechanics

Let’s look at an opportunity for a cash-secured put in Nvidia (NVDA).

The strike below represents a ~29-delta put expiring 17 July 2026.

If we wanted to buy Nvidia (NVDA) at a discount, we could sell the $200 17 July 2026 Put for about $6.15 in premium. With shares trading near $214.86, that represents roughly a 3.17% return on risk over 52 days, and about a 9.8% discount from the current price if assigned.

If the stock remains above $200 through expiration, the option expires worthless and the premium is kept as income ($615 kept). If the stock falls below the strike, assignment would result in purchasing shares at an effective cost basis of $193.85.

This is for educational purposes only—not a trade recommendation. Remember to always do your own due diligence and consult a financial advisor before making investment decisions.

Throttle Q&A

Should We Avoid Small-Cap Stocks Entirely?

Not necessarily.

Just understand that smaller names often come with wider spreads, less efficient pricing, and more volatility.

Some are great businesses.

Not all are great options vehicles.

Is It Better to Wait for a Red Day or Higher IV?

Usually both overlap.

Red days often increase implied volatility, which can expand premiums naturally.

That’s part of why patient entries can improve positioning without needing larger directional bets.

But understand that attempting to perfectly time the market is dangerous.

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Disclaimer

The information provided in this newsletter is sourced from reliable channels; however, we cannot guarantee its accuracy. The opinions expressed in this newsletter are solely those of the editorial team, contributors, or third-party sources and may change without prior notice. These views do not necessarily reflect those of the firm as a whole. The content may become outdated, and there is no obligation to update it.

This newsletter is for informational purposes only and does not constitute personal investment advice. It is not intended to address your specific financial situation and should not be construed as legal, financial, tax, or accounting advice, or as a recommendation to buy, sell, or hold any securities. No recommendation is made regarding the suitability of any investment for a particular individual or group. Past performance is not indicative of future results.

Options come with inherent risks. We strongly advise you to consult with a financial advisor before making any investment decisions, including determining whether any proposed investment aligns with your personal financial needs.