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

Markets ended June on a strong note, with the S&P 500 and Nasdaq reaching new highs despite rising bond yields and lingering uncertainty. The dollar, however, continued to slide—dragged down by renewed tariff tensions and the recently passed “Big Beautiful Bill,” a wide-ranging package of tax cuts and spending caps that has raised concerns about the U.S. fiscal outlook. Currency markets responded with caution, as investors reassessed the long-term impact of the bill on growth and debt levels.

In the political sphere, Elon Musk’s criticism of the bill’s cost drew a sharp response from former President Trump, who suggested he would consider deporting the Tesla CEO if reelected. While that story captured headlines, a quieter but important development emerged: Congress dropped a proposal to pause state-level AI regulations, allowing states like California, Colorado, and Utah to continue crafting their own AI policies. This sets the stage for a more fragmented regulatory environment as tech companies navigate a growing patchwork of rules across the U.S.

“Good-To-Know’s”

ETFs can be bought and sold throughout the trading day, offering more flexibility than mutual funds. Most are passively managed, mirroring benchmarks like the S&P 500, though some are actively managed. They offer built-in diversification, low costs, and tax efficiency. Today’s ETFs cover everything from broad indices to niche strategies like dividends, sectors, or income-generating options overlays.

Quote(s) I Like

Thought Throttle

Not all companies, or assets for that matter, are created equal. This is especially the case when there’s premium on the line. Most traders flock to high volatility stocks for the juicier premiums, but stocks aren’t the only tool. ETFs are a huge piece of the puzzle (We covered the basics earlier in “Good-To-Know’s”).

They offer a diversified and usually more stable alternative for collecting premiums. This is due to the lessened risk (unsystematic risk)—it’s no longer just the risk of a single company, but a group of companies.

If you’re financially savvy, you’re probably wondering what the trade-off is with this added stability. Follow along with us as we address the difference between selling options on stocks and ETFs.

What are ETFs?

As mentioned in the previous section, they are essentially baskets of stocks bundled together that trade like a single security. When you sell options on an ETF, you’re not dependent on one company. You’re making a market-level play, often on a sector, theme, or broader index.

You avoid many of the land mines that plague single companies: earnings surprises, CEO scandals, regulatory hits, or deteriorating business conditions. While these events can certainly still affect exchange traded funds, these risks are spread out, limiting their potency.

Another benefit of ETFs is liquidity. Large ETFs—think SPY, QQQ, IWM, XLF—trade millions of shares a day and post penny-wide bid/ask spreads with deep open interest at almost every strike. They also offer weekly expirations that stretch one to two years into the future, giving you far more flexibility to roll or ladder positions. Many individual stocks (even well-known ones) have wider spreads, thinner volume once you move out a few strikes, and far fewer expiration dates—making adjustments costlier and exits slower when volatility spikes.

What is the downside? With this lower risk, you are also accepting the likelihood of a lower return. The premiums received from selling options on ETFs are typically less than those of options sold on individual tickers. Knowing where you stand in terms of risk comfortability will be crucial in determining proper allocations.

Stock Options vs ETF Options

What to choose?

Both ETF and stock options belong in a trader’s toolbox, but the right choice depends on your goals. If you value consistency, smaller drawdowns, and less homework, ETFs provide a steadier path to income—less exciting, but that’s the point.

If you crave bigger premiums and don’t mind the occasional restless night, single stocks can supercharge returns. Just remember: every options trade is a risk-reward calculation. Pick your poison, but know exactly what’s under the hood before you hit Sell to Open.

Trade Mechanics

Compare this NVDA At-The-Money put option with this SPY At-The Money put option:

The NVDA put offers a significantly higher return—4.32% over 31 days, or about 64% annualized—thanks to the stock's higher volatility. In contrast, the SPY put generates a more modest 1.53% monthly return, or about 20% annualized.

This reflects the ETF’s lower volatility and diversified nature. This difference makes sense: single-stock options, especially for names like NVDA, tend to carry more premium due to the potential for sharp moves.

Capital commitment is another key factor. Selling a cash-secured put on SPY requires over four times the capital of NVDA—$60,969 vs. $14,859. If you're working with limited funds or want to scale more aggressively, NVDA may be the more flexible choice. However, the trade-off is risk: if NVDA drops sharply, you'll be assigned 100 shares of a volatile stock, while SPY offers broader exposure with less dramatic movement.

Lastly, the discount to today’s price if assigned is wider with NVDA (3.9%) compared to SPY (1.4%). That means the NVDA trade offers a more attractive entry point—if you’re willing to potentially hold a high-beta stock. SPY, on the other hand, is better suited for more conservative income generation or market exposure at a small discount.

While the annualized returns on both trades can look appealing, they assume smooth, repeatable outcomes—selling the same option setup month after month without disruption.

In reality, slippage, early assignment, market volatility, and cash being tied up longer than expected can all reduce returns. If NVDA experiences a sharp drop or headline-driven selloff, rolling the position or holding the shares might become necessary.

With SPY, the risk is more muted, but large macro shocks can still lead to assignment. As always, size your trades according to your risk tolerance and ensure you're prepared to own the underlying asset if assigned.

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 are some general tips for selling ETF vs Stock Options?

1. Single Stock = Company Bets, ETF = Market Bets

Stock options are tied to one company—your P&L can swing wildly on earnings, executive scandals, or a single downgrade. ETF options, on the other hand, reflect a basket of assets, so you’re betting on sectors or indexes, not specific companies. Less surprise, more trend-following.

2. Volatility: Fireworks vs. Stability

Individual stocks often bring high IV and big price swings—great for juicy premiums, but also more risk. ETFs like SPY or QQQ usually show lower volatility, which means smaller premiums but a smoother ride. Choose based on your appetite for speed bumps (or landmines).

3. Liquidity: Not All Are Created Equal

Top stocks like AAPL or NVDA can be highly liquid—but others? Not so much. ETF options (especially on major funds like SPY, IWM, DIA) generally offer tighter bid-ask spreads, high open interest, and weekly expirations. Rolling and scaling positions is often easier with ETFs.

4. Dividends: Subtle But Important

Stock dividends can trigger early call assignment, especially in deep ITM positions near ex-div dates. ETFs pay dividends too, but often quarterly and less aggressively. Still, know the calendar—early assignment risk still exists, just at a lower frequency.

What are the tax implications of selling ETF Options?

When you sell an ETF option—like a cash-secured put or covered call—the premium you collect is taxed as short-term capital gains. That means it’s taxed just like regular income from a job, no matter how long you held the trade.

If the option expires worthless, you simply pay taxes on the premium you kept. If you’re assigned shares, you don’t owe taxes right away—the premium you collected just adjusts your cost basis or sale price when you eventually sell the shares (remember this so you can ‘look at the bright side’ when you are unwantedly assigned).

Some types of index options (like SPX) follow a special IRS rule where 60% of the profit is taxed at the lower long-term rate and 40% at the higher short-term rate. But this rule does not apply to ETF options like SPY or QQQ—they’re taxed entirely as short-term gains.

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