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 Dow, S&P 500, and Nasdaq all climb as Bitcoin is back above $90K

• Thanksgiving has come and passed. How did it affect the economy?

• About a week out, and there is about a 90% chance the Fed cuts rates

• This donor commits to donate over $6 billion to the “Trump Accounts”

• Abolish the Fed? See what Big Short’s Michael Burry thinks

• This financial company still believes in Nvidia’s stock, even as it struggles

• Does Bitcoin need December, or does December need Bitcoin?

“Good-To-Know’s”

End-of-year trading feels weird because it is weird. Volume thins out, desks are half empty, and market makers don’t want to warehouse risk going into January. But even through the slowdown, the market still has a heartbeat.

And it’s strongest during the first and last hour of the session.

These sessions often have the tightest spreads, the most active market makers, faster fills, better price discovery, and lower slippage on both entries and exits. Make sure you track the liquidity windows in the underlying before you trade.

These slight advantages could be all the difference you need.

Quote(s) I Like

Thought Throttle

The Santa Claus rally.

The last 5 days of December and the first 2 days of January. Since the 1950s, it has an average gain of 1.3% in these 7 days.

This rally serves as an indicator for the following year. As the saying goes, “If Santa Claus should fail to call, bears may come to broad and wall.” In other words, if the rally does not take place, it is usually a bearish sign for the following year.

But Why Does This Rally Happen at All?

Many factors are debated as to why this happens, and in all likelihood, they all play a role in this phenomenon. Here are some of the commonly theorized factors:

1) Tax-Loss Harvesting Reversal. Both retail and institutional investors sell their losers, typically in early December (More in the Throttle Q&A). Then they repurchase them in late December or early January, which creates an upward flow.

2) New-Year Positioning. Funds begin quietly buying early-January (yes, before January) to start the new year strong.

3) Low Institutional Resistance. Desks are empty. Markets aren’t being pushed around as much. Order flow is retail-heavy, and thus is a much more predictable drift.

4) Post-Fed Clarity. December’s Fed meeting removes one of the biggest volatility overhangs. Markets hate uncertainty. Once the Fed decision is out of the way, IV typically comes down, and markets trade more directionally. This is usually upward.

In short, late December typically exhibits positive drift, lower volatility, and cleaner price action.

How Could This Affect Option Sellers?

For option sellers, the Santa Claus Rally creates a uniquely favorable environment. Markets tend to drift upward, realized volatility collapses, and implied volatility bleeds—three things you rarely get at the same time.

Lower volatility means options decay faster than usual, especially on the put side. And because tax-loss selling steepens put skew early in December, CSPs often carry more premium than they “should,” given the “non-volatility” near year-end.

The cleaner upward drift also reduces the odds of those sharp, out-of-nowhere moves that normally punish short premium. You may not be fighting hedge funds, macro catalysts, or surprise flows—instead, just lighter, steadier, simpler tape.

In other words, the Santa Claus Rally isn’t just a fun seasonal pattern.

It’s one of the few times all year when market mechanics, psychology, and volatility structure line up in a way that could directly improve option-selling odds.

At The End of The Day…

The Santa Claus Rally is a pattern, not a promise. There are decades of data behind it, but it’s still rooted in seasonal behavior, fund flows, and human psychology.

None of these things guarantees a repeat or recurrence. Markets can break character whenever they want, and December isn’t immune to surprises, macro shocks, or sudden shifts in sentiment.

So treat this more as a framework than a formula. Use it to spark ideas, guide your preparation, and refine your setups. Do not assume the market “has to” behave a certain way.

It absolutely does not.

Always do your own research, understand the risks, and size your trades accordingly. Seasonality can tilt the odds, but it doesn’t remove uncertainty.

To All Theta Throttle Subscribers…

One of the hardest parts of putting together each edition of Theta Throttle is deciding what to write about. Seriously—if there’s a topic you’re curious about or something you want me to dive into, just reply to this email. There’s a very good chance it’ll become its own edition. Let’s build.

Throttle Q&A

What is Skew and Why Is December the Most Predictable of Any Month?

In short, skew gets predictable in December because everyone has an idea of how the flow works. Early in the month, managers dump their losers for tax reasons. And when that happens, downside pressure spikes, and put prices inflate almost automatically.

As fear comes out of the market—post-Fed clarity, lighter news, and the start of the Santa drift—those same inflated puts start to deflate. Skew flattens, not because anything dramatic changed, but because the buyers of protection simply step away.

For retail traders, this means put premium looks unusually rich early in the month and naturally cools off into year-end. In a perfect world, you’re just watching a seasonal pattern unwind.

Yes, this leans heavily into the realm of speculation, so make sure you research further. This is only meant to spark an idea. Stay safe and strategic.

Why Is the Week Between Christmas and New Year’s So Slow?

In short, because almost nobody is home. And the people who are trading don’t want risk on their books heading into a new year.

When this happens, and liquidity evaporates, prices don’t seem to move much, but the bid-ask spreads widen like crazy. Market-makers widen these quotes to protect themselves when there is illiquidity.

For retail traders, this means that fills get slower, slippage gets worse, and your trade suddenly incurs another fee.

It’s not that the market is “calm.” It’s more so that nobody’s there to make it lively.

What is Tax-Loss Selling, and Why Does it Matter for Options?

Tax-loss selling, or tax-loss harvesting, is when investors purposely sell losing positions at the end of the year so they can use those losses to reduce their taxes. The sale usually isn’t about the underlying company itself. Rather, it’s a way to offset gains and lower the tax bill.

When a lot of people do this at once, those stocks get pushed down more than they normally would. And once the loss is realized, many investors buy the shares back later. This is usually either after the 30-day wash-sale window or when the new year starts.

For option sellers, that creates a simple pattern—early-December weakness (higher put premiums) followed by a late-December rebound (clean CSP profits).

To All Theta Throttle Subscribers…

A lot of you have been reaching out, asking for more on stock selection tips and things to look out for. I’m considering putting together a downloadable guide that breaks down the essentials in plain English.

If that’s something you’d be interested in, let me know by replying to this email or by subscribing if you haven’t already. The more interest I see, the faster I’ll prioritize building it. And as always, sharing this newsletter with a friend who’s curious about options goes a long way in helping us grow.

And yes, this guide will be FREE.

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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.

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