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

• The market likes the idea of the war in Iran ending, just ask your portfolio

• It’s very, very likely that the Fed holds rates still in April

• Gas is over $4 nationally for the first time in 4 years

• The man himself, Warren Buffett, made this large bet

• Private Equity/Credit and Crypto, coming to a 401(k) near you?

Thought Throttle

When things start going bad for a company on a fundamental level, the share price doesn’t always follow suit immediately (crazy, right?).

But eventually it will.

Growth slows. Margins get squeezed. Management starts producing explanations instead of results.

By the time the share price finally reflects these changes, the damage has already been done to our dollars.

Fundamental decay, in my experience, can be combated by being honest with ourselves, having the wisdom/courage to recognize it, and having the willpower to create distance.

By distance, I mean—distance between a weakening business and our money.

In my experience, a few things tend to show up when a good company starts to slip. Let’s jump in.

1.) Growth slows—and the explanations get longer.

“Temporary headwinds.” “Investing for the future.” “One-time items.”

Maybe.

But it behooves management to have us investors believe the agenda they’re pushing.

The reality of the situation is more important than lip service.

Growth is crucial. Results are crucial.

2.) The ‘Missionaries’ turn into ‘Mercenaries.’

The original builders, or at least any leader that holds the truest and most potent vision for the company, fades out of leadership roles.

And in come operators focused on hitting metrics and KPIs for the next quarter.

The numbers may hold for a while, but it is unlikely that the culture will.

The decision by the new higher-ups will align with what benefits them most, often conflicting with what is best for us shareholders longterm. Expediency becomes the name of their game.

3.) Valuation stays high (or continues up) while reality softens.

The multiple assumes strength, or at least, future strength.

When businesses start showing weakness, the market will eventually catch on.

And once the jig is up, the market will not be gentle. The bigger they are, the harder they fall.

Crashing earnings and a crashing multiple is a double whammy, and can be doubly devastating to a portfolio.

4.) Metric Compromise seeps in

Everything looks fine at a glance. Until we compare it to last year. Or the year before.

Deterioration doesn’t always jump out as “bad,” but it creeps in as “less-good.”

Margins compress. Returns on capital slip. Cash flow doesn’t keep up.

Nothing breaks all at once. It just… stops getting better.

5.) The company is loved, but only by the analysts.

Upgrades pile in. “Strong buy, Strong buy.”

The Wall Street narrative gets louder and louder to where it seems almost obvious.

But, real people—your mom, your boss, your friend, your dog, etc.—think that the company is totally lame.

Best not to stick around to see who is right.

In Summary…

If you can get ahead of a strong company that’s weakening and sell at exactly the top, then well done.

That’s not easy. But that’s not even the main objective (or a repeatable objective), either.

For us option sellers, our goal is much simpler:

Create distance from the bad or worsening company and our portfolio.

We don’t need to short it, we don’t need to call the top. We just need to exit and avoid.

Our dollars will thank us.

And yes, there are countless more signs of a deteriorating company not given here, but these have served me well. Not to mention, #4 is pretty all-encompassing.

“Good-To-Know’s”

Delta gets framed as probability. A 25-delta → ~25% chance of assignment.

Fine.

But delta is also, and primarily, exposure.

It represents the movement in the price of the option per corresponding move in the underlying stock.

It’s a manageable risk on solid businesses. It’s dangerous on deteriorating ones.

Delta tells you how much you’re in, but not what you’re in.

Quote(s) I Like

Trade Mechanics

If we thought the recent optimism related to the Iran situation resolving is a bit premature, at least through mid-April, we could structure a trade that pays as long as the market doesn’t push meaningfully higher.

Instead of predicting a drop, we can define a ceiling.

One way to do this is through a bear call spread, a.k.a. a call credit spread.

Let’s use SPY as an example.

With SPY sitting at $650.34, trading below its 200-day moving average ($658.40), we may believe that the 200-day MA is acting as a resistance level—our ceiling.

So, what would we do to set up this trade?

We could sell the 17 April 2026 $660 Call for $7.65 and buy the 17 April 2026 $670 Call for $3.50, netting us a credit of $4.15 ($415).

If SPY stays below $660, we keep the full $415 premium.

If it moves higher, losses are capped by the $670 call. Our max loss would happen at a share price equal to or above $670, leaving us with a loss of $585.

We’re not calling for a drop—just positioning against a move above a defined level.

This structure allows us to define risk upfront, benefit from time decay, and avoid attempting precise, unrealistic timing of the market.

2.0 Version — Adding to the ‘Put Side’

If we wanted to take advantage of SPY’s elevated IV (~90% IV Rank) and were comfortable owning shares, we could also sell the Apr 17, 2026 $630 Put (~25 delta) for $5.90 ($590) in premium.

This creates a Jade Lizard.

At expiration, if SPY is…

• Below $630 → Assigned to buy 100 shares at a $624.10 cost basis

• Between $630–$660 → Keep full ~$1,005 credit (Cha-Ching!)

• Between $660–$670 → Partial loss on call spread, though offset by put premium

• Above $670 → Call spread max loss ($585), offset by $590 put premium ($5 net gain, lol)

Upside risk is largely offset. Downside introduces ownership.

Just an idea. As always, do your own research. Best of luck.

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 Roll if Fundamentals Worsen?

If fundamentals worsen, we want to create distance from the underlying company, not just distance from assignment.

Rolling just extends our exposure. It has no effect on the underlying business.

Can Technicals Override Weak Fundamentals?

Temporarily, it is possible, yet super difficult. And it puts you at the mercy of luck.

On a long enough time horizon, definitely not.

Fundamentals are king long-term.

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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.