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

• Stocks tiptoe higher as traders pretend they’re calm

• A very unfortunate ruling was discussed at the State of the Union

• NVDA is set to release earnings today—are AI fears legit?

• Why does Jamie Dimon see ‘Pre-Crisis’ parallels?

• The paradox of “Sell America” with “Record Foreign Inflows”

“Good-To-Know’s”

When a trade earns 2.5% in just 20 days, it may be tempting to annualize this return and call it a 54% annual return.

But this should be taken with a grain of salt, since markets don’t operate in straight lines.

Annualizing short-term returns assumes you can redeploy capital instantly, at the same yield, with no interruptions, no drawdowns, and no volatility shifts.

That is a lot of assumptions.

While the annualization can shed light on the effectiveness of the return, we need to understand that realistic compounding depends on consistency, risk control, and survivability.

Quote(s) I Like

Thought Throttle

Beating the market is many things, but it is certainly not easy. It can be simple, but not easy. Working out everyday for 10 years is simple. I don’t think that this would be considered easy.

Newer traders have a habit of making some money or going on a streak and thinking that they have everything figured out. They think it is easy.

But like in life, sooner or later, overconfidence (or arrogance) will burn you.

Here are a few frameworks or methods that can be used to reel in our overconfidence:

1. Process & P&L

Returns and outputs are important.

But don’t only judge based on whether a trade made money. Was the system followed?

Profit can come from things outside of our control, but long-lasting discipline comes from consistency, self-control, and a willingness to face the truth.

Focusing on the inputs separates skill from randomness, even though both will continue to affect our portfolios.

2. Pre-Commit Before We’re Tested

Limits and boundaries should not be arbitrarily made in the heat of the moment.

This includes things like max position size, delta exposure, adjustment rules, etc.

Overconfidence is much more rare and less potent during the planning phase, with it peeking its head after a few winners.

If you’re arbitrarily pushing the boundaries you set, you’re not being bold—you’re abandoning discipline.

Pre-commitment can protect you from your most unwise self.

3. Show Our Work

A trade journal can be used—and should be used like a psychological mirror.

Log the entry, log the exit, but also log the emotion or temptation.

Winning streaks often lead to larger risk, and boredom often leads to unnecessary trades.

If you don’t audit yourself, the market will definitely do the honors.

4️. Worst Case Scenario

This one is simple, really. Before placing a trade, assume it fails. Not only a fail, but a failure in the worst way possible. A catastrophic failure.

Overconfidence focuses on the payoff, but proper planning leads to level-headedness and good decision-making before we’re in too deep.

If you don’t know exactly where the trade starts to hurt, you likely do not have a full enough grasp on the risk.

5. Respect Time

Most serious emotional pulls and temptations are short-term.

Three green weeks feels like mastery, while three red days can absolutely spike your cortisol (iykyk).

Zoom out. Look at the big picture.

If our strategy hasn’t lived through multiple cycles, we don’t yet know it.

If we haven’t lived through multiple cycles, we may not yet know ourselves and our trading habits/temptations well enough.

Best to take the time required to get to where we want to be.

6. Pause After a Big Win

Losing streaks hurt, but winning streaks distort.

Don’t go down the slippery slope of expanding position sizing beyond rationality after a little bit of green.

It is urgent to take a breath and make sure that we’re in the right head space to evaluate potential trades.

Momentum is one hell of a force, but we need to ensure that it is working for us, not haphazardly throwing us into foolish trades.

7. Invite Friction

It can be helpful to explain your thesis to someone else out loud.

Professional firms build risk committees for a reason. Retail traders could benefit from implementing their own version.

When your ideas survive scrutiny, they improve, and when they don’t, you avoid damage.

But humility is required to seriously consider and weigh the criticism.

Either way, it is drawing you closer to a better outcome.

All This to Say…

Trade with conviction, but understand that there is a world of difference between confidently entering trades and overconfidently entering bad trades.

Hope this was helpful. Happy Wednesday everyone!

Trade Mechanics

NVDA is currently trading around $192.85.

If we’d like to potentially own shares at a lower price, we could sell the 17 April 2026 $175 put (~26 delta) and collect about $6.27 in premium.

If NVDA stays above $175 through expiration, the option expires worthless and we keep $627 in income. A return of 3.72% in 52 days, which annualizes to ~29.19%.

If NVDA drops below the strike, we’d be assigned 100 shares at $175, giving us an effective cost basis of $168.73 after premium.

Simple, defined, and patient.

2.0 Version

The Covered Strangle.

If we already own 100 shares of NVDA and wouldn’t mind selling at a higher price, we could pair the short put with a covered call. Selling the 17 April 2026 $220 call (~24 delta) brings in an additional $4.12 in premium.

This brings total collected premium to $10.39, or $1,039 per 100 shares.

At expiration, if NVDA is:

• Below $175 → we buy more shares at $175 and keep the full premium

• Between $175 and $220 → both options expire worthless; we keep the entire $1,039

• Above $220 → we sell our existing shares at $220 and still keep the premium

The structure collects income from both sides of the market, but it comes with tradeoffs. Downside risk still exists, and upside is capped in exchange for premium.

Stay sized appropriately, understand the obligations, and let time do the work.

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 is Probability of Profit?

Probability of Profit (POP) is the statistical likelihood a trade finishes profitably.

There are a few common ways it’s calculated:

• Delta Approximation: A 30-delta short option implies roughly a 70% chance of expiring out-of-the-money.

• Option Pricing Models: Platforms use models like Black-Scholes or binomial models to generate a probability distribution of future prices.

• Normal Distribution Calculations: Some traders directly calculate the probability of price staying beyond a strike using standard deviation and time to expiration.

• Broker-Displayed POP: Many platforms compute and display POP automatically using their internal volatility assumptions.

POP is obviously not a guarantee but a probability.

A high probability usually comes with smaller premium. Always pair probability with position sizing and expected value.

Why Did My Covered Call Get Assigned Early?

Early assignment usually happens when there’s little to no extrinsic (time + IV) value left, the call is deep in-the-money, and/or a dividend is approaching.

When remaining extrinsic value is smaller than the dividend, early exercise makes sense.

It can also happen very close to expiration as time evaporates extrinsic value.

When you sell a covered call, you’ve agreed to sell your shares.

Sometimes it just happens sooner than expected.

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