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

• I’m watching if chip stocks stop falling after their recent drops, and whether the big tech companies (like Microsoft and Google) keep promising to spend heavily on AI and/or if investors get tired of the high prices and start selling to move money into other sectors.

• Beyond headlines, I'm focused on core CPI/PPI readings. This obviously will shape rate-cut expectations into late 2026 and influence whether tighter conditions persist.

• I'm looking at how upcoming reports (tech-heavy calendar) affect participation. Strong AI-driven results are great, but I want to see if growth broadens beyond the mega-caps amid high overall valuations.

Thought Throttle

Assignment. If we sell options long enough, it’s going to happen.

We open our portfolio and see a short call deep ITM with just days left, or our short put sitting well in the money as expiration approaches. Assignment suddenly feels real.

How did we get here?

Usually for predictable reasons: the stock moved sharply against us, we’re in the final week where time decay accelerates, or we’re sitting right before an ex-dividend date on a short call. Sometimes earnings didn’t go our way.

This is what happens when a trade goes against us far enough, close enough to expiration.

Here’s the important part:

This shouldn’t really hurt us.

Our whole philosophy as option sellers is built for this. When we sell cash-secured puts, we’re already willing to own the stock at the strike minus premium. When we sell covered calls, we’re willing to sell shares at the strike.

We collect premium upfront precisely to cushion these outcomes. Assignment doesn’t mean the strategy failed, but perhaps that it reached its logical end. We planned for the downside from day one.

Now that we’re here, what can we do?

Accept the assignment.

Often the simplest. We would end up owning (or selling) the shares exactly as the original trade intended. If we accept assignment, we can even start selling calls (or puts) against the new position.

Roll the position.

Buy back the short option and sell a new one further out (and/or different strike). Done right, we can collect more credit and reset the clock. This is usually done with 3–7 days left.

Buy to close.

Just exit the trade entirely. Take the P/L as it stands and free up capital. Clean and simple when the stock has moved too far or our sentiment has fundamentally changed.

Turn it into a spread.

Kind of an alternative. Buy further OTM protection to cap the risk and turn the naked short into a defined-risk position.

Base the decision on the view of the stock and our overall portfolio risk.

Nothing else.

A few things we should absolutely aim to avoid:

• Panic-closing at the worst moment. Don’t let a temporary spike shake us out if our original thesis is still intact.

• Hoping and waiting until the last minute. This creates pin risk and forces bad outcomes. Decide with intention.

• Chasing the premium already collected. That money is gone. Focus only on forward math and our future with (or without) the stock.

• Ignoring ex-dividend dates on short calls. Early assignment here is not uncommon. Plan for it.

Bottom line: Assignment is part of the business. The best option sellers handle these moments calmly, according to process, without letting fear or ego take over.

Only sell options on situations we’re truly willing to live with.

Thanks for reading — best of luck out there.

Quote(s) I Like

Trade Mechanics

Let’s look at an opportunity for a cash-secured put on Reddit (RDDT).

The strike below represents roughly a ~24-delta put expiring 17 July 2026.

If we wanted to buy Reddit (RDDT) at a discount, we could sell the $155 July 17 Put for about $6.20 in premium. With shares trading near $178.11, that represents roughly a 4.17% return on risk over 38 days, and about a 16% discount from the current price if assigned.

If the stock remains above $155 through expiration, the option expires worthless and the premium ($620) is kept as income (Yippee). If the stock falls below the strike, assignment would leave us purchasing shares at an effective cost basis of $148.80.

Keep in Mind…

Premiums fluctuate with volatility, earnings cycles, and investor sentiment. Returns assume smooth expiration and no early assignment. Wider spreads may appear on less-liquid strikes—Reddit has wider spreads than SPY. This position requires roughly $14,880 in collateral and rewards patience over prediction.

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 if I get assigned on a short put but I no longer like the stock as much as I did when I sold the put?

This is exactly why we stress selling puts only on companies we’d happily own.

If your view has changed based on a material change in the company (not a feeling), the cleanest move is to put distance between you and that stock.

Do not hesitate. Take the small hit if necessary—it’s better than becoming a reluctant bag-holder.

Also, recognize: We should never sell puts on “maybe” stocks.

Is it ever better to just let it assign rather than rolling?

Often, yes. If you’re happy owning (or selling) the shares and don’t mind tying up the capital, accepting assignment is frequently the lowest-friction choice.

Rolling makes sense when you want to keep the position open and collect more premium, but don’t roll just to avoid assignment.

The “roll” should be treated as an independent trade.

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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.