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

• AI Spending: Is It Actually Paying Off?

  Big tech companies continue to pour billions into AI infrastructure, but eventually investors will want proof that all that spending is generating meaningful revenue and profits. I'm watching upcoming earnings calls for signs that AI investments are translating into stronger growth rather than just bigger capital expenditures.

• Market Breadth and Sector Rotation

  For much of the past few years, a handful of mega-cap tech stocks have carried the market. I'm watching whether money continues to flow into small-caps, financials, industrials, and other sectors. A broader rally tends to create more opportunities for option sellers and signals a healthier market environment.

• Interest Rates, Inflation, and the Fed

  The market remains highly sensitive to inflation data and Federal Reserve commentary. If rates stay higher for longer, it could pressure high-growth stocks and increase volatility. For option sellers, that often means higher premiums—but also greater risk if markets react sharply to economic data.

Thought Throttle

When most options sellers evaluate a trade, they look at things like delta, expiration, premium, implied volatility, and assignment risk.

All important.

But there is another cost hiding in plain sight that will get you if you’re not prepared:

The bid-ask spread.

Unlike assignment, you won't receive a notification about it. Unlike a losing trade, it doesn't jump off your account statement.

It simply takes a little piece of your return every time you enter and exit a position.

Let's look at two real companies.

At Friday's (6/12) close, Nvidia (NVDA) was trading at $205.19. The July 17, 2026, $195 Put (roughly a 30-delta put) was quoted at a Bid (price you get) of $4.95, and an Ask (price you pay) of $5.05.

This gives us a bid-ask spread of $0.10.

Meanwhile, Progressive (PGR) closed at $203.11. Its July 17, 2026, $195 Put (also roughly a 30-delta put) was quoted at a Bid of $3.30, and an Ask of $4.10.

This gives us a much larger bid-ask spread of $0.80.

At first glance, both trades appear fairly similar. The stocks trade near the same price, the strikes are identical, the deltas are nearly identical, and the expirations are identical.

Yet the spread tells a completely different story.

If we assume we receive a fill exactly at the midpoint price, the cost of crossing half the spread would be:

NVDA:

• Spread = $0.10

• Half Spread = $0.05

• Monetary Cost = $5 per contract

PGR:

• Spread = $0.80

• Half Spread = $0.40

• Monetary Cost = $40 per contract

That's 8x more slippage simply because one option is less liquid than the other.

And remember, this is only the entry.

If we eventually buy the option back, roll it, etc. before expiration, we may pay another spread on the exit as well.

Even worse, these calculations assume we actually get filled at the midpoint. This is not always the case.

Anyone who has ever sat and watched a limit order refuse to fill for thirty minutes knows exactly what could happen.

How much premium are we willing to give up just to get the trade executed?

The monetary cost is only a part of the equation.

Wide spreads just create friction. They require more patience, more management, and more decision-making. Orders take longer, adjustments become harder, rolling becomes pricier.

All of this increases the amount of time and stress spent managing a trade.

The frustrating part is that a lot of people, typically newer investors/traders, never notice this cost because it doesn't show up as a commission or fee. It simply gets absorbed into the trade.

But liquidity is one of the most underrated factors in options selling.

Keep more of what you collect.

Thanks for reading.

Quote(s) I Like

Trade Mechanics

Let's look at two opportunities for cash-secured puts: one in Tesla (TSLA) and one in Motorola Solutions (MSI). Each strike below represents roughly a 20-delta put expiring July 17, 2026.

If we wanted to buy Tesla (TSLA) at a discount, we could sell the July 17, 2026 $365 Put for about $5.53 ($553) in premium. With shares trading near $404.66, that's roughly a 1.54% return on risk over the next 31 days and an 11.2% discount from the current share price if assigned.

For Motorola Solutions (MSI), selling the July 17, 2026 $380 Put generates about $3.80 ($380) in premium with shares trading near $404.93. That's about a 1.01% return on risk over the same timeframe and a 7.1% discount from the current price if assigned.

At first glance, both setups appear fairly similar. The stocks trade at nearly identical prices, the expirations match, and both options sit around a 20-delta probability of assignment.

But notice the bid-ask spreads.

TSLA's spread is just $0.15 wide, while MSI's spread sits at $1.40. Assuming a fill at the midpoint, the implied slippage cost is roughly $7.50 per contract for TSLA versus $70.00 per contract for MSI.

That's more than nine times the friction before we even consider eventually closing, rolling, or adjusting the position.

Keep in Mind…

Premiums fluctuate with volatility, earnings cycles, and investor sentiment. Returns assume expiration without assignment and no early exercise. Wider bid-ask spreads can increase execution costs and make position management more difficult, particularly when rolling or closing trades.

Both positions require approximately $36,000–$38,000 in collateral and reward 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.

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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.