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 Rollout

• The Dow is hitting records, while the S&P and NASDAQ struggle

• Weak consumer spending adds uncertainty before jobs data

• Speaking of the labor market, we are expecting a slowdown

• Treasury volatility is quite low

• Insurance brokerages are feeling the pressure from AI

• 35 days out and there is about a 20% chance the Fed cuts rates

“Good-To-Know’s”

Option sellers collect premium up front. A BTC allows the option to be repurchased later—ideally at a lower price—locking in the (hopefully) profit and eliminating assignment risk.

But BTC orders aren’t just for profits.

They are used to manage risk, reduce exposure, or just exit early when conditions change.

Knowing when to Buy-To-Close is just as important as knowing when to sell.

Quote(s) I Like

Thought Throttle

When Should We Take Profits on Sold Options?

First of all, if this is a question that you are asking yourself, the hell yeah. The market has been kind to you.

But when deciding on whether we should close out the position and take profit, we need to consider—how kind has the market been, and over what time frame?

There’s a meaningful difference between sitting on 10% of max profit after 20 days and 60% after 3 days. Both are “green,” but they are not equally green. If the market hands us a gift early, shouldn’t we at least think about taking it?

Important distinction before we go any further:

When an option is still open, you haven’t realized anything yet. What you’re looking at is unrealized profit or the remaining premium captured.

Onward.

A Practical Framework

The quartile method breaks the trade’s lifespan into four equal parts and adjusts expectations accordingly.

A simple version looks like this:

• 1st Quartile: ~40% Return Required

• 2nd Quartile: ~60% Return Required

• 3rd Quartile: ~75% Return Required

• 4th Quartile: ~90%+ Return Required

The logic is straightforward:

The earlier we achieve a meaningful portion of max profit, the less incentive there is to stay exposed. Time decay is no longer doing the heavy lifting—we already got paid.

It is simple capital efficiency and risk removal.

But What the Hell Is A Quartile and How Are They Calculated?

A quartile is essentially just a fourth, and breaking a trade’s timeline into quartiles is simpler than it sounds.

Start with the days-to-expiration at entry and divide it by four.

A 40-DTE option becomes four 10-day segments. We’re just contextualizing time.

When large portions of max profit show up early, the remaining days are often about squeezing pennies, all while holding the same downside risk. Not very efficient.

The quartile lens allows you to acknowledge when you’ve already been meaningfully paid for your time.

Where Nuance Comes In…

There’s a line that needs to be walked.

Rules of thumb are tools, not prison bars. But discipline is still obviously super important.

If you abandon your framework the second it feels inconvenient, then you don’t have a framework, you have a vibey mess.

On the other hand, if you’re sitting at 39% on the final day of the first quartile, are you really going to ignore it because it didn’t hit 40%? Probably not.

Structured judgment, not robotic precision.

One More Thing

The percentages above are an example framework, but they likely don’t suit everyone.

The numbers should be:

• rooted in your strategy/outlook

• consistent with your risk tolerance

• and aligned with how you actually trade (not how you wish you traded)

Some traders are thrilled taking 25–30% quickly and redeploying. Others are comfortable letting winners breathe.

But having no framework at all is dangerous.

Design your exits the same way you design your entries—with a purpose.

Trade Mechanics

In this example, we’re comparing two cash-secured put opportunities, one in Amazon (AMZN) and one in AMD (AMD).

Each strike selected is the ~25–27 delta option expiring March 20th, 2026, just 38 days away.

AMD comes out on top in terms of potential return, offering 3.67% in just 38 days. That’s roughly a 41.35% annualized rate if unassigned—meaningful premium and a meaningful discount if we’re assigned.

The AMD put reflects greater implied volatility and larger expected swings—we are compensated for the added uncertainty with a higher premium/return.

AMZN, on the other hand, is your steadier mega-cap. It’s a 1.92% return for the same timeframe, which is about 20.02% annualized.

This reflects AMZN’s scale, liquidity, and comparatively lower implied volatility. The premium is smaller, but so are the expected swings.

Both trades require similar capital, but the volatility profile, temperament required, and potential shocks differ meaningfully.

Keep in Mind…

Premiums can inflate around catalysts, and all return figures assume a clean expiration with no early assignment, liquidity slippage, or spreads widening.

Be prepared to own 100 shares if assigned. That’s the whole point of cash-secured puts. If you wouldn’t own the stock, you shouldn’t sell the option.

Tax treatment varies by account type, with most equity options taxed as short-term gains. Market conditions shift quickly, so size appropriately and always have a plan for assignment.

Basically, there is nuance. Know the ins and outs of your position well. Best of luck.

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

What’s the Difference Between How the Dow and the S&P 500 are Calculated?

The Dow Jones Industrial Average is a price-weighted index, meaning stocks with higher share prices have more influence on its movement. A high-priced stock can move the Dow more than a lower-priced one, even if the lower-priced company is larger or more actively traded.

On the other hand, the S&P 500 is a market-cap-weighted index. Companies are weighted by total market value. Larger companies carry more influence, so moves in mega-cap stocks tend to drive the index.

This is one of the reasons the two can move differently on the same day. The Dow can be pushed by a few high-priced names, while the S&P reflects broader market capitalization.

Expected Returns of Selling Options Compared To Dividends

Dividends typically provide steady, reliable income, with yields ranging from 1% to 4%, depending on the industry. They are considered lower-risk but offer more predictable returns.

Options premiums can provide higher returns, especially in range-bound or volatile markets, as they depend on factors like stock movement and volatility. Many options sellers shoot for a return of ~2-3% a month, though not always achieved due to the volatile nature of options.

Basically:

• Dividends: Steady income, moderate returns.

• Options Premiums: Potentially higher returns, higher risk.

Got any questions or comments? Feel free to reply to this email—we’d love to hear from you!

If you found this helpful, feel free to share or forward this email to anyone who might be interested! We appreciate your support.

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.