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

• Four red days in a row for the S&P 500

• The IRS says to save more—2026 limits get a healthy bump

• It’s about a coin flip for a December rate cut

• Middle-class wallets tighten, and retail feels it

• Congress votes to crack open the Epstein files. I wonder if it will actually happen this time?

• Technical traders turn cautious on the S&P 500

• Jobless claims surprised us… Not in a good way.

• The hype train hits a speed bump as Bitcoin breaks below $90K

• The market eyes Nvidia. Their earnings may steer the whole market

“Good-To-Know’s”

Simply put, it is sticking with a losing situation because you have already invested so much into it.

Maybe we sold a cash-secured put that went deep in the money due to deteriorating fundamentals. Rather than cutting our loss and closing the trade, we keep prolonging it. Rolling week after week, not because the math makes sense, but because we “need to make it back.” That’s the sunk cost talking.

Quote(s) I Like

Thought Throttle

An option’s premium is the total price of a contract. It is what the buyer pays, and what we, the sellers, collect. Though premiums can be sporadic, this price is far from random. Understanding what factors into that premium sheds light on what to look for as a trader.

Premiums can be broken down into two basic parts: Intrinsic value (what’s real) and extrinsic value (what’s potential). Together, they tell the story of what the market thinks could happen, and what it’s willing to pay for the possibility.

Intrinsic value is simple. It’s the portion of the premium already backed by reality, based on where the stock trades now versus the strike price. It’s what’s already true.

For a call, it’s how far the stock is above the strike price. For a put, it’s how far below the strike price. In essence, it’s the value of the contract if it were exercised today.

Extrinsic value, however, is where most of the action happens. It represents time, volatility, and market emotion. Sellers love high extrinsic value because it decays. And we profit as it burns away.

The real drivers of extrinsic value are Theta and Vega, or time and volatility. As fear rises, volatility expands the extrinsic value and inflates the premium. As expiration nears, time melts extrinsic value away, pulling the option’s price closer to its intrinsic worth.

Understanding what’s inside a premium helps us pick better trades. High premiums aren’t always good, and low ones aren’t always bad. What matters is why they’re priced that way.

Context matters.

Every premium tells a story. With enough practice and experience, traders learn how to read it.

Trade Mechanics

Let’s look at two opportunities for cash-secured puts: one in SOFI Technologies (SOFI) and one in Hims & Hers Health (HIMS). Each strike below represents roughly the 25-delta put expiring December 19th, 2025.

Let’s take a closer look:

If we wanted to buy SOFI Technologies (SOFI) at a discount, we could sell the $23 strike Dec 19 ’25 Put for about $0.98 in premium. With SOFI trading near $26.24, that’s roughly a 4.45% return on risk in about a month, and a 16% discount from the current price if assigned.

For Hims & Hers Health (HIMS), selling the $32 strike Dec 19 ’25 Put yields a $1.51 premium with shares trading near $36.26. That’s a 4.95% return on risk over the same timeframe and a 15.9% discount from the current price if assigned.

Two simple setups showing how a steady income can be built, one contract at a time. Not bad.

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. Both positions require roughly $2,000–$3,000 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.

Throttle Q&A

Why Do LEAPs Have Higher Premiums than Shorter-Term Calls?

LEAPs cost more because they contain significantly more time value. With more time until expiration, there’s more uncertainty and more opportunity for the stock to move, which makes the option more valuable. That’s why LEAPs decay more slowly than short-term options, but also why they’re more expensive upfront. You’re essentially paying a premium for time and potential.

Don’t Forget The Fundamentals

Simply, don’t forget the foundation of fundamental analysis. Disregard this at your own peril.

Selling options is powerful, but without conviction in the company’s balance sheet and growth prospects, you’re just collecting premium on a weak hand. Pairing solid fundamentals with options is what turns cost-basis trimming into a durable, long-term strategy.

You have to do the work. Your portfolio depends on it.

Why Does It Seem Like Premiums Rose So Much This Week?

Premiums jumped because volatility did. When fear or uncertainty hits the market—like the selloff we have seen over the past couple of days—implied volatility spikes, and option prices inflate.

The market is simply charging more for risk. For sellers, that means richer premiums but choppier seas. Know the risks of higher premiums. There is no free lunch.

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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.