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What is the Market Telling Us?
Weekly Edition: May 20th, 2026
Market Movements
Current Level | Weekly Return | YTD | |
|---|---|---|---|
S&P 500 | 7,353.61 | -0.749% | 7.42% |
NASDAQ | 25,870.71 | -1.059% | 11.31% |
Dow Jones | 49,363.88 | -0.625% | 2.71% |
VIX | 18.06 | 0.445% | 20.80% |
Russell 2000 | 2,747.07 | -3.485% | 9.86% |
*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 Watch
Call-option speculation has surged back toward meme-stock-era levels, especially in AI and semiconductor names, as traders rush to speculate on upside momentum.
Treasury yields continue climbing. The 30-year Treasury closed above 5.1% for the first time since 2007, while the 10-year pushed toward 4.7%. Higher yields are already pressuring interest-rate-sensitive areas like housing, with mortgage rates rising again and homebuilder stocks weakening.
Bank of America’s latest fund manager survey triggered one of Wall Street’s more well-known contrarian signals. Portfolio cash levels fell to 3.9%, below the bank’s historic “sell signal” threshold of 4%, suggesting investor positioning has become increasingly aggressive.
Thought Throttle
Right now the market is loud with big narratives: AI infrastructure, tariff-driven reshoring, defense spending, energy demand, and semiconductor competition.
These themes create real opportunities, but they also breed speculation. We see traders chasing momentum names and lottery-ticket calls, convinced they’re early to the next big story.
In these types of environments, it’s easy for us as option sellers to lose focus. The temptation is to hunt the highest premiums on the hottest names.
It’s hard not to, especially if you peruse some of the ridiculously high (also rare) gains from gambling with options that you see on forums and social media.
The main draw about selling options isn’t calling the biggest winners. It’s more about structure, probabilities, and commitment to discipline.
A well-placed cash-secured put can let us:
Get paid while we wait for entries we actually like
Potentially acquire shares at a discount
Lower our cost basis from the start
Benefit from time decay on our own terms
It’s a different framework than trying to pick the decade’s winners.
Speculative periods make this framework feel even more useful. When emotions run hot with overconfidence, oversizing, premium chasing, we’ve found it helps to do the opposite—stay patient, selective, and honest about the risks and what we’re willing to own.
Don’t be tempted/fooled, we’re not trying to collect the absolute highest premium.
We’re trying to get paid, consistently, for risks we already understand and would be comfortable holding.
This approach won’t make us heroes in a parabolic moonshot.
We’re just here to turn market noise into something closer to a repeatable process. In my experience, it’s been a solid bet in a game that quietly punishes impatience.
Thanks for reading this week’s edition. Stay disciplined.
“Good-To-Know’s”
No, you don’t have to immediately start selling Covered Calls — When assigned, we don’t automatically jump to covered calls. Crazy, I know. But the wheel isn’t always the right move.
We only sell calls if the stock is trading at or above our fair-value range. Otherwise, we use that most useful of skills, patience, to wait for appreciation.
We could also sell puts again on the underlying if it makes sense.
But the moral of the story is: when a put is assigned, that isn’t immediately time to sell call options.
Just a reminder.
Quote(s) I Like
“The big money is not in the buying and the selling, but in the waiting.”
“I never met anyone, or heard of anyone, or read of anyone who was successful who was a pessimist. You have to be positive, or you’ll never get anywhere.”
Trade Mechanics
Let’s look at a potential trade on a cash-secured put in SPDR S&P 500 ETF (SPY), which currently sits around $733.73.
The strike below represents roughly a ~24-delta put expiring July 17th, 2026.
SPDR S&P 500 ETF (SPY) | |
|---|---|
Current Price | $733.73 |
Put Sold | Jul 17 $700 Put (~24 Delta) |
Mid-Premium | $8.45 |
Capital At-Risk | $69,155 |
Return if Not Assigned | 1.22% |
Annualized Return | ≈ 7.82% |
Cost Basis if Assigned | $691.55 |
Discount from Current Price | ~5.75% |
Days to Expiration | 59 DTE |
Estimated Collateral Required | ~$69,155 |
If we wanted to buy SPDR S&P 500 ETF (SPY) at a discount, we could sell the $700 July 17th Put for about $8.45 in premium. With shares trading near $733.73, that represents roughly a 1.22% return on risk over 59 days, and about a 5.75% discount from the current price if assigned.
If the stock remains above $700 through expiration, the option expires worthless and the premium is kept as income. If the stock falls below the strike, assignment would result in purchasing shares at an effective cost basis of $691.55.
Keep in Mind…
At first glance, a ~7.8% annualized return may not seem all that crazy, especially compared to some of the huge yields floating around on more speculative names right now. But that’s kind of the point.
This trade isn’t really about squeezing every last dollar of premium possible. It’s more about getting paid while waiting for a lower entry into one of the broadest market ETFs out there. SPY is liquid, diversified, and generally a lot less chaotic than many of the high-premium stocks traders are chasing right now.
Also, a few other things to remember:
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.
Do your own research, and 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.
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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.
