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 are playing tug‑of‑war: on one side, investors cheer rising odds of a Fed rate cut after U.S. jobs and services data came in flat; on the other, tariff threats are injecting fresh uncertainty into valuations. One moment, it’s a bullish charge led by Palantir’s stellar earnings, the next, whispers of soaring tariffs give bulls a case of the jitters.

Speaking of tariffs, former President Trump is back on the tariff warpath, this time aiming at Big Pharma. He floated a plan to slap tariffs of up to 250% on foreign-made drugs over the next 12 to 18 months, nudging pharma stocks and trade-sensitive sectors into a mild sweat.

Combined with disappointing earnings from AMD, Rivian, Lucid, and Snap, the market’s recent optimism is beginning to show some cracks. With some analysts warning of a potential pullback and markets caught between AI-driven enthusiasm and broader economic uncertainty, investors may need to brace for continued volatility.

“Good-To-Know’s”

Assignment can happen at any time before expiration in American-style options (most options), though it’s more common near expiration or when the option is deep in-the-money. The risk isn’t necessarily in the assignment itself—it’s in being caught off guard and tying up your resources.

That’s why managing collateral, strike selection, and trade timing is essential. Understanding assignments helps option sellers prepare for both the opportunities and responsibilities that come with their positions. With that in mind, onward.

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Thought Throttle

If you’ve spent much time at all selling options, it’s very likely that at some point you’ve been assigned one of your contracts. Assignment isn’t a failure, even though sometimes it feels like a gut punch.

Many options traders and investors act as if assignment is the worst possible outcome. This speaks to the lack of strategy and intent that goes into selecting trades for many traders and investors.

Assignment should be a real consideration when setting up the trade, so that it is not a shock. Ideally, you’re indifferent as to whether you’re assigned or not. That would be the most efficient strike selection. In this instance, you would be happy with assignment to the same degree that you are happy with the premiums.

But that is the theoretical ideal. Knowing that this is likely an unattainable goal, we can still bring the power of options into play. In an uncertain market, indifference is a superpower.

So, how can we take the sting out of assignment and stop treating it as if it’s the failed outcome of our sold option?

Have a Post-Assignment Plan

The first step would be having a post-assignment plan. Plan for it and accept that it’s a very, very real outcome. Before you enter the trade, ensure that you are okay with purchasing (put) or selling (call) the shares. That way, if the options contract is assigned, it’s the execution of your plan, not a failure. Assignment will eventually come. Be prepared.

When determining your thesis/outlook, you have to truly ask yourself if you’re okay with the outcome of assignment. Too many times, we will get caught up looking at the premiums and not fully consider assignment. Do not do this. As Warren Buffett says, the first rule of the stock market is to never lose money. The second rule, never forget rule number one.

If you’re just hoping that you won’t get assigned, that’s not trading—and certainly not investing. That’s gambling. The true potential of options comes from smart, strategic planning, allowing versatility and adaptability when the unexpected occurs. If one terrible assignment can wipe out a large amount of your gains, then it’s not worth it.

Review Your Thesis, Not Just the Price

When assignment seems likely, ensure that your original ideas and biases are still accurate and valid. Price movements don’t always invalidate your thesis. As we know, Mr. Market can be schizophrenic, but it’s up to us to the best of our abilities to focus on the signal, not the noise.

The extent to which you can do this over a long time horizon is the extent to which your portfolio will blow your mind. Ask yourself: Were the price movements temporary market noise or a short-term issue? Or were they due to a substantial change in the fundamentals of the business?

If it’s a fundamental change in the underlying, you need to reevaluate and reestablish your thesis. In some instances, it might be better to completely exit the position—or in the case of a call being assigned, re-enter the position later.

But if it’s just a temporary movement in price or a non-substantial change in fundamentals that will correct itself, it’s usually best to maintain your long-term outlook. Zoom out. At the end of the day, value outweighs noise. Over a long enough horizon, as Benjamin Graham noted, the stock market is a weighing machine, not a voting machine.

Don’t Panic, Pivot

Once you’ve reviewed your thesis, if nothing is broken, adapt. It’s not time to panic, it’s time to pivot. Let’s say you sold a cash-secured put and got assigned. Now what? One idea is to sell a covered call against your newly acquired shares.

If the terms make sense (premium, strike, and expiration), you can continue generating income while potentially offloading the stock at a profit. This is the foundation of what’s known as the Wheel strategy. You sell a put, get assigned, then sell a call, continuing to collect premium in a structured, repeatable way.

This is illustrated below:

Assignment doesn’t mean you’re stuck. It can mean that you’re positioned and ready for the next move. But that move needs to be intentional. The goal is to stay flexible without making reactive decisions or locking in avoidable losses. What you don’t want to do is rush into a loss. Master the pivot.

In Summary

The more intentional you are when entering a trade, the less emotional and reactive you’ll be when one gets assigned. With a plan in place, a consistent review of your outlook, and the right perspective, you can meet assignment not with panic, but with open arms.

Options are powerful tools for income, flexibility and long-term positioning. When used with strategy and patience, assignment becomes part of the opportunity, not the obstacle. Plan your trades, stay adaptable, and keep at it.

Trade Mechanics

Let’s look at an example. At the time of writing, Robinhood (HOOD) trades at $103.90. Assume that we like the company but aren’t comfortable paying current market prices.

Instead, we choose to sell the Sept 19, 2025 $90 put, which has a delta near 20 and a premium of $3.59. This works, since we’re happy if we keep just the premium ($359), and we are happy if we have to (get to) buy HOOD at $90 ($86.41, when considering the premium).

Let’s break it down:

• If the option expires worthless, you keep the $359 premium for agreeing to buy at $90. That’s a 4.15% return in 44 days with no shares purchased.

• If you’re assigned, you acquire 100 shares at $90, but thanks to the premium collected, your effective cost basis drops to $86.41. This is a solid discount from the original $103.90 market price.

Important to Note…

There are a couple of things that are good to look out for as we are considering entering a position:

• Bid-ask spreads matter. If they're too wide, you might have trouble getting a fair fill or exiting the trade efficiently. Liquidity is key.

• Assignment risk, as we have covered, needs to be considered seriously. If the option goes in-the-money, you could be assigned early, especially around dividends.

• Implied volatility can also impact your results. A drop in volatility helps if you’re short the put, but a spike can temporarily inflate your unrealized losses.

• Keep in mind, your capital is still tied up while the trade is open, so consider the opportunity cost of other trades.

• Don’t forget about taxes—because Uncle Sam will not. Option premium is usually taxed as short-term income, even if the option expires worthless.

As always, remember that options involve risk and no outcome is guaranteed. This is just one way to think through a potential setup, not a prediction or promise. Spend your time and attention on options before you spend your dollars. Do your own due diligence.

Make sure you're not only chasing premium—understand your trades, manage the risks, and stay intentional.

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 I Change My Delta Target When Markets Are Volatile?

Volatility doesn’t just affect prices, but it affects strategy too. In higher-volatility environments, even lower-delta options pay well. If you typically sell 20-delta puts, shifting to 15-delta during uncertain weeks might still give you strong returns with a wider safety margin.

But remember: lower delta means a lower chance of assignment. So ask yourself, do you want to own the stock, or just collect premium? Your delta should reflect your intent, not just the market’s mood.

How Are Option Premiums And Assignments Taxed?

For equity (stock) and ETF options, premiums from contracts that expire are generally short-term capital gains in the year they expire. If your put is assigned, the premium reduces your stock’s cost basis. Conversely, if a call is assigned/exercised, the premium increases your sale proceeds. If you close an option position early (by buying it back), you’ll realize a short-term capital gain or loss.

There are also a couple of rules that we won’t go too deep into, like the Wash sale rule and the 60/40 rule. Keeping it high level, Section 1256’s 60/40 rule (60% considered long-term, 40% short-term) applies to many broad-based index options (like SPX, NDX, or RUT), but not to ETF options like SPY or QQQ. Also, wash-sale rules apply to both options and stock, so a loss may be disallowed if you repurchase a similar position within 30 days.

For more information, consider speaking with a tax professional.

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