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 Watch

• Inside the Fed — Minutes from the Fed’s July meeting come out Wednesday (Today, when you’re reading this). There was dissent with some wanting higher rates instead of holding steady, so investors will watch for any signs the Fed might change course soon.

• Retail Takes Center Stage — Home Depot reported Tuesday and beat expectations, though it still noted a weak housing market. Target and Lowe’s report Wednesday, Walmart on Thursday. Together they’ll show how shoppers are doing—we’ll get some insight into the average American.

• Rates Are Making Noise Again — Long-term Treasury yields have jumped, with the 30-year hitting higher and higher levels. Higher rates can pressure stock prices (especially pricey tech and growth stocks) and may bring more market swings if they keep rising.

• Tech Finally Getting Shaky? — AI and high-growth stocks sold off Tuesday, weighing on the Nasdaq. Investors are questioning high valuations and whether AI spending can keep growing. After insane numbers, I’m watching to see if this is just a dip or the start of a bigger shift.

Thought Throttle

Red days suck. Mostly.

Nobody likes opening their brokerage account and seeing a sea of red. But for option sellers, red days aren't always something to fear. They sometimes create some of our best opportunities.

When stocks fall, two things can happen that work in our favor.

First, prices get cheaper (duh). If there’s a company we already want to own, a red day can bring the stock closer to a price where we'd actually be comfortable buying it.

Second, premiums can get juicier. Falling markets are often accompanied by higher volatility. Higher volatility generally means higher option premiums, which means we may get paid more for selling the same put option.

Think about a stock trading at $105 that we'd happily own at $100. On a quiet green day, the $100 put might not pay us much.

Then the stock falls to $102, volatility picks up, along with the increase we get from the put option’s negative delta (stocks go down, puts go up)—and suddenly that same $100 put becomes much more valuable.

The company didn't necessarily become a worse investment (usually. But sometimes it drops for a reason; when it does, seriously, seriously reasses). The market may have simply given us a better opportunity to sell the put we were already interested in selling.

That's why we don't feel like we need to force trades every week.

We can keep a list of companies we'd like to own, decide what prices we'd be comfortable paying, and wait.

Of course, not every red day is an opportunity. Sometimes a stock is falling because something has fundamentally changed. A bad earnings report, deteriorating business, excessive valuation, or other serious problem shouldn't be ignored just because the premium looks attractive.

The business is the foundation, the premium is all the shiny add-ons… The foundation needs to be solid before you look at a fancy chandelier.

We're not necessarily looking for falling stocks; we’re looking for companies we already want to own temporarily being offered to us on better terms.

Instead of just seeing a red day and asking, “How much did I lose?”, use your option-seller brain and also ask:

“Did anything just go on sale?”

Thanks for reading.

“Good-To-Know’s”

Think of it as saying, “I don’t care what price I get anymore—just get me out.”

Capitulation often comes with a sharp drop in price, unusually high trading volume, and extreme levels of fear/pessimism.

But capitulation can sometimes occur near the end of a major selloff. Once many of the investors who wanted to sell have already sold, selling pressure can begin to dry up.

That doesn’t mean capitulation automatically marks the bottom, but it can be a sign that fear in the market has reached an extreme.

Best not to be this emotional with our trading decisions.

Quote(s) I Like

Trade Mechanics

Let’s look at an opportunity for a cash-secured put in Nvidia (NVDA).

The strike below represents roughly a 24-delta put expiring October 16, 2026.

If we were excited about buying Nvidia (NVDA) at a discount, we could sell the $200 October 16 put for about $5.30 in premium. With shares trading near $219.74, that’s roughly a 2.72% return over 59 days, while giving us an effective purchase price about 11.4% below the current price if assigned.

The $200 strike itself also sits roughly 9.0% below NVDA’s current price, giving the stock some room to fall before the option moves in-the-money.

If NVDA remains above $200 through expiration, the option expires worthless and the $530 premium is kept as income. If the stock falls below the strike, assignment would result in purchasing 100 shares at an effective cost basis of $194.70 per share.

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.

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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.