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 seems to be sprinting uphill with one eye on the crest and the other on the drop. AAPL’s climb toward a $4 trillion valuation is catching headlines, but a widespread outage at AWS reminds us that even the most dominant platforms can stumble. Meanwhile, Congress’s budget gridlock leaves the data pipeline choked, making every earnings beat and tech glitch carry outsized weight.

From the mover-list, sector-specific action stood out. Financials and digital-payments firms (for example, AMEX) showed up among today’s gainers, while precious‐metals stocks (like Newmont) were among the losers, dragged by gold’s plunge. With macro clarity still off the table, could a well-timed option premium offer the clearest edge? Time will tell.

“Good-To-Know’s”

Quote(s) I Like

Thought Throttle

Most options traders know, at least in part, what Implied Volatility is. But few know exactly what it measures, how to use it, or, most importantly, how to contextualize it.

If I told you that the Implied Volatility for a stock was 10%, 50%, or 90%, that number alone may reveal general information about the underlying and be useful when comparing tickers. But what about determining how the IV has changed over time? You need to have a reference for comparison before you can judge whether something’s high or low.

It’s like me telling you it’s 70 degrees outside, but not saying whether it’s July or January. The number still matters, but without seasonality, you can’t interpret it. The same goes for volatility. A 50% IV can mean “panic mode” for Coca-Cola, but “business as usual” for Tesla.

So, what is Implied Volatility (IV)? IV is the market’s forecast of how much a stock is expected to move in the future. This is not in direction, but in magnitude. There isn’t a negative IV. Without getting too technical, it is the annualized expected movement.

For example, if QRS had an IV of 90% and its current price was $100, this would mean the market is pricing a move of ±$90 in a year. It’s just the market’s best guess at potential turbulence ahead.

The reason this needs context is in a scenario like this. If XYZ has an implied volatility of 25%, but a typical IV of around 15%, we can say volatility is elevated. Conversely, if ABC has an implied volatility of 60%, but its usual range is closer to 75%, then IV is actually low for that stock.

We give this number context through something called IV Rank (IVR). This is a way of measuring where the current IV sits relative to its own past. It is expressed as a percentile.

If the IVR of a stock is in the 30th percentile, that means that IV is relatively low—higher than ~30% of the data, but lower than ~70%. On the other side of the spectrum, if IV Rank were at the 80th percentile, that would signal an elevated IV.

Don’t get me wrong, IV is certainly useful in comparing volatility across strikes and tickers, but IV Rank helps us see whether a stock is currently calm or anxious compared to its own history. It tells you whether the uncertainty is cheap or expensive.

So, How Do We Use this as Option Sellers?

When an underlying’s IV Rank is high, premiums have expanded. The market is paying more for these options relative to “normal circumstances.” In other words, we’re paid more to take the other side of heightened fear and uncertainty.

Remember, in finance, you’re always compensated for the risks you assume. When implied volatility is elevated, the perceived risk is higher, so the reward follows suit. Conversely, when IV Rank is low, it signals complacency. Premiums shrink, and the opportunity for sellers often does too. Less perceived risk means less compensation.

But How Can This Make Me Money?

We can profit from discrepancies between implied and realized volatility.

If the market expects a big move (high IV) but the stock moves less than anticipated, option sellers keep the difference. It can be thought of as the “overreaction premium” that we collect when reality doesn’t match expectation. That’s the essence of selling premium.

Let’s take earnings as an example.

Suppose ABC historically moves about 5% on earnings, but this quarter the options market is pricing in an 8% move based on implied volatility. If you believe the actual move will come in closer to 5%, that 3% gap represents opportunity. You can sell premium into that inflated IV, and when volatility collapses post-earnings (the “vol crush”), you profit from the overestimation.

Even if the stock barely moves, the options decay faster than the market priced in — and you collect the difference. That’s not luck. That’s context turned into edge. The only thing left to do is find these opportunities. Onward.

Trade Mechanics

Cash-Secured Put: HIMS

This week, let’s keep it simple and straightforward with a cash-secured put on HIMS. As you know, this setup generates income while positioning you to buy shares at a discount. The strike selected is the ~30-delta option expiring November 21, 2025.

Let’s break it down:

This trade pays you $340 up front for agreeing to buy HIMS at $44 if shares dip by expiration. That’s your income for patience. If the stock holds above the strike, you simply keep the premium. If assigned, you’ll own 100 shares at an effective cost basis of $40.60, giving you ownership at nearly an 18% discount of the current price, along with the ability to sell covered calls against your new shares.

In short, it’s the textbook “get paid to wait” trade. It is an income-first setup that thrives in elevated volatility. With 115% IV and 71 IV Rank, the options are richly priced, offering a strong opportunity for sellers comfortable with short-term swings. As always, make sure you are happy to own the underlying.

Keep in Mind…

Premiums shift with implied volatility, time, and strike selection. These return figures assume a smooth expiration with no early assignment. Always keep full collateral available—100 shares × strike price—and remember that high IV cuts both ways: higher income, higher noise.

CSP premiums are taxed as short-term capital gains, even if the contract spans months. Stick to liquid tickers with tight bid-ask spreads and clear catalysts. Remember to always do your own due diligence and consult a financial advisor before making investment decisions.

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

Does IV Tell Us Which Direction a Stock Will Move?

Simply put, no. It doesn’t predict where a stock will go. Only how much the market expects the underlying to move. Expected magnitude, not direction. To reference the Greeks, it does not deal in matters of delta, only vega.

When IV rises, it signals greater uncertainty. Traders are paying higher prices for options because they expect bigger swings, not necessarily up or down.

It’s worth noting, though, that volatility and price sometimes move inversely. When markets drop, IV tends to rise. This is because the market’s long-term bias is upward, so sharp declines feel unnatural and in need of an upward movement. Option buyers bid up the prices, sellers demand a higher premium, and implied volatility swells.

Why Does Implied Volatility Drop After Binary Events (Fed Meetings, Earnings, Etc.)?

Since Implied Volatility measures the magnitude of an expected movement (Remember, not the direction), and stocks tend to move based on the outcome of these events, IV will rise leading up to the event.

Once this event takes place, the market is no longer expecting a drastic movement. The catalyst and reaction would have already happened. The market moves on and takes the expectations with it. Volatility collapses.

In some instances, the underlying may barely move, but the option seller may make a good chunk of their profit and can close their position early. All due to this volatility crush. Nice.

Why Do Some Tickers Always Have Higher Implied Volatility Than Others?

Implied volatility doesn’t just measure fear, but uncertainty. Companies with explosive growth potential or headline risk (like TSLA, NVDA, or RIVN) have futures that are harder to price, so their options trade richer. The market charges more for unknowns.

On the flip side, predictable “boring” names like KO or JNJ move in smaller, steadier ranges. Their earnings are routine, their surprises rare, and their IV stays naturally low.

Every stock has its own rhythm and temperament. Before judging whether IV is high or low, get to know the company. Some are volatile, others are built for cruise control.

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Disclaimer

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