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We Sell Options Anyway
Weekly Edition: May 13th, 2026
Market Movements
Current Level | Weekly Return | YTD | |
|---|---|---|---|
S&P 500 | 7,400.96 | 1.464% | 8.11% |
NASDAQ | 26,088.20 | 2.326% | 12.25% |
Dow Jones | 49,760.56 | 0.685% | 3.53% |
VIX | 17.99 | 4.898% | 20.33% |
Russell 2000 | 2,842.83 | -0.500% | 13.69% |
*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 VIX closed near 18 this week despite the S&P 500 remaining near highs. Classic 2026 behavior: upside momentum intact, but the crowd refuses to fully unwind hedges after earlier shocks.
The S&P 500 sits near highs, but only ~53% of stocks are trading above their 200-day moving average. Participation seems to be weaker than the index suggests.
CBOE reported that SPX options set a single-day trading record of 6.7 million contracts in April. Ultra-short-duration trading activity (0-DTEs) continues to dominate.
Thought Throttle
The market keeps rewarding the impatient. Or it seems like it.
For now…
Chasing every rip higher has a way of punishing most of us over time.
That’s why a surprising number of serious investors continue to sell options, despite all the not fun stuff like taxes, slippage, commissions, capped upside in big rallies, and the quiet capital drag of tying up cash.
But still, we endure all that to get paid to wait on terms we actually like.
At its core, selling premium monetizes patience. We’re not predicting direction so much as renting out volatility to someone who wants it more.
The premium lowers cost basis immediately. A cash-secured put at a strike we’d happily own turns “waiting for a better entry” into an something that makes us dollars. Expiring worthless leaves us with the premium, where assignment leaves us with the shares for cheaper than the market offered originally (and still, the premium).
Once we own, covered calls can do the same thing on the exit side. Premium flows while we hold a business we’ve vetted. The strike is our “good enough” sale price. The stock can drift, grind, or even run a bit… and we still get paid the premium and (ideally) sell for a gain.
In my experience, selling options imposes structure on what is otherwise an emotional game of greed and fear.
This isn’t about alpha fireworks. We usually know the max loss, the breakeven, and the probability range upfront. For me, portfolio management becomes a repeatable process instead of a shuffling game based on that week’s headlines.
Of course, the drawbacks are real. Taxes hit short-term gains harder. Slippage and fees matter on smaller accounts. In explosive rallies you can watch good (or great) businesses get called away. We can miss entries entirely on the put side if the market sprints past our strikes. We have to bear the opportunity costs.
But still, we accept these trade-offs because the framework is worth it. Positions can be sized right, strikes can be based on valuation anchors (not just premium-maxxing), rolling can be done when conviction justifies it.
It’s very unlikely that options selling alone will make us the heroes of the parabolic move. But it rewards showing up disciplined, month after month, collecting for the risk we’re willing to take on businesses we actually want to own.
In a game that punishes most emotional decisions, that structure shouldn’t be underestimated/undervalued.
Thanks for reading.
Quote(s) I Like
“The operator should take in a great stock of patience. He will see other stocks go up and his stock stand still. He will see and hear daily that something else is making riches for traders, but he must shut his ears to these statements, even if they are right as far as fluctuations go. He must just sit on his stock, which is intrinsically below its value, until other people observe that it is selling too low and begin to buy it.”
“Every moment in business happens only once. The next Bill Gates will not build an operating system. The next Larry Page or Sergey Brin won’t make a search engine. And the next Mark Zuckerberg won’t create a social network. If you are copying these guys, you aren’t learning from them.”
Trade Mechanics
Let’s look at two opportunities for cash-secured puts. One in NVIDIA Corporation (NVDA) and one in the SPDR S&P 500 ETF Trust (SPY).
Each strike below represents roughly the ~27-delta put expiring June 18th, 2026.
NVDA | SPY | |
|---|---|---|
Current Price | $220.78 | $738.18 |
Put Sold | Jun 18 $205 Put (~28 Delta) | Jun 18 $715 Put (~27 Delta) |
Mid-Premium | $5.70 | $7.11 |
Capital At-Risk | $19,930 | $70,789 |
Return if Not Assigned | $570 / $19,930 = 2.86% | $711 / $70,789 = 1.00% |
Annualized Return | ≈ 32.07% | ≈ 10.36% |
Cost Basis if Assigned | $199.30 (~9.7% discount) | $707.89 (~4.1% discount) |
For the SPY, selling the $715 June 18th Put yields a $7.11 premium with shares near $738.18. That’s a ~1.00% return on risk over the same timeframe (~10% annualized), and about a 4.1% discount.
If we wanted to buy NVDA at a discount, we could sell the $205 June 18th Put for about $5.70 in premium. With shares near $220.78, that’s about a 2.86% return on risk over 37 days (~32% annualized), and about a 9.7% discount from the current price.
Versatility and income, baby.
THIS IS WHY I LOVE OPTIONS!
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
Isn’t Selling Options Just Picking Up Pennies in Front of a Steamroller?
Selling Options stupidly is.
If you size stupidly or sell naked… then yeah, probably.
Cash-secured puts and covered calls aren’t high-leverage bets. They’re defined-risk trades around businesses you like.
What About Opportunity Cost and Capital Drag?
Real, but often overstated.
Our cash is working to collect premium while waiting for our price.
Don’t compare the returns to perfectly timing LEAP options on every big name (as if we are capable of that level of prediction consistently). Keep the opportunity comparisons fair.
Collateral isn’t dead money if it’s generating yield with a plan.
Should We Only Sell Options?
Hell no.
I think it is best to pair options on top of a core stock portfolio to juice our yields.
But the premiums can also be fuel for other ideas, like LEAPs and/or higher-conviction bets.
The world is your oyster.
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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.
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.
