📩 The Option Premium Weekly Issue - August 17, 2025

I want to be direct with you, The Option Premium exists because trading education and community are, after 23+ years as a professional options trader, what I’m committing my career to building…on my own. No marketing nonsense, no constant upsells, no overly priced services and none of well, to put it frankly, the bullshit that exists in almost every corner of this industry.

After more than two decades in the options market, I can tell you the real edge isn’t in chasing hype or gambling on long shots; it’s in a steady, rules‑driven process. Over just the past few months, that process has produced over $7,000 per contract in actual, fully tracked results across our strategies. Every trade is explained in plain language, why we entered, how we’re managing risk, what we’re waiting for, because my goal is for members to learn the why as much as the what.

If you’re drawn to an approach that puts education first, emphasizes discipline over prediction, and shares trades with total transparency, then this may be worth your time. I won’t over‑promise; markets are unpredictable. But what I can commit to is a structured framework, straightforward communication, and strategies designed for consistency. What we’re building is a genuine trading community, accessible, practical, and focused on long‑term skill development. If that sounds like a fit, I’d be grateful to welcome you aboard.

And if subscribing isn’t the right step for you right now, there’s still a meaningful way to support the effort. Share The Option Premium on the social media channels you use, or simply pass it along to a friend, colleague, or anyone curious about trading. This is a grassroots project, like a neighborhood paper or a community team, it only grows when people spread the word. Every share, every forward, every mention helps keep this work alive and accessible for traders who value education over the noise and false promises that surround so much of this industry

Thanks for your continued support! I truly appreciate it!

Andy

📉 Market Snapshot and Commentary

The Fed Wavers, the Market Rotates, and Options Traders Recalibrate

Markets remain resilient, but beneath the surface, a lot is changing. The Fed is increasingly likely to cut rates in September, inflation is simmering, not boiling, and investors are rotating out of growth and into rate-sensitive corners of the market. That combination creates both friction and opportunity.

Rotation, Not Reversal
Last week revealed a quiet regime shift. Big-cap indexes still look strong, but gains outside of the Magnificent Few have been far less convincing. Growth stocks have come under pressure, while areas like small-caps, homebuilders, and financials showed signs of life. This kind of rotation isn’t a collapse, it’s a recalibration. For options traders, it’s a reminder that directional edge is narrowing, while volatility edge may be widening.

The Fed Leans Toward Action
The July CPI report was largely in line: headline at 2.7%, core ticking up to 3.1%. But services costs and producer prices both surprised higher. Add in softer labor-market data, and the market now sees an 85% chance of a September rate cut. Fed governors are openly dissenting in favor of easing, and Powell may use Jackson Hole (Aug. 22) to tee up a pivot. In the short term, this could compress short-term volatility, reward duration exposure, and reprice risk across sectors.

Why Options Traders Should Pay Attention
For premium sellers, shifting rate expectations can reshape implied volatility and skew, especially in rate-sensitive ETFs like XLF, ITB, and IWM. If small- and mid-caps continue to lead while mega-cap tech stalls, this rotation can offer a more balanced opportunity set across deltas. A falling-rate backdrop supports the bullish side of high-probability strategies: diagonal spreads, long LEAPs in PMCCs, and bullish verticals in value-tilted sectors.

Meanwhile, the lack of follow-through in many growth names calls for caution. Even solid earnings gaps have led to immediate consolidations, reminding traders that expectations are high and staying nimble is key. If growth resumes its leadership, there will be time to press. Until then, capital-efficient trades with defined risk may offer the most attractive path.

The Big Picture
Yes, the market remains technically bullish. But leadership is narrowing, supply/demand looks more balanced, and consistency is elusive. In short: this is a trader’s market. Swing setups come and go quickly, and premium is more often earned during uncertainty, not after clarity. The best setups going forward may be those that lean on mean reversion, sector rotation, and a framework that respects time decay as much as direction.

🧮 Weekly Market Stats

📰 Weekly In-Depth Articles 

🗓️ Tuesday, August 13th - From Steady to High-Octane: Poor Man’s Covered Calls at Different Volatility Levels

🗓️ Thursday, August 15th - Overconfidence in the Options Market: Lessons from Chen & Sabherwal

🎓 Options 101: The First Steps to Trading

Buying Your First Call Option (Speculation 101)

Every trader remembers their first call option. The math looks irresistible: turn $150 into $500 if the stock jumps a few points. It feels like a cheat code. But beneath that excitement is a lesson most beginners only learn the hard way, options are a battle between possibility and probability.

This week’s article breaks down:

• Why call options seduce new traders with visions of quick riches

• How sellers think differently, leaning on probability, time decay, and volatility

• The $50 stock example, what both buyer and seller actually need to win

• Why speed and volatility matter far more than simply “being right” on direction

• The seller’s playbook for stacking odds in their favor

• When buying calls can still make sense, low IV, realistic strikes, and small tactical bets

For new traders, it’s a reminder that call options aren’t lottery tickets, they’re structured bets with math working both for and against you.

📘 Read the full guide and learn how to approach call buying with clarity (and caution):
👉 Buying Your First Call Option (Speculation 101)

🧠 Mental Capital

Train not just your trading system, but your trading self.

Conviction Under Uncertainty

Uncertainty isn’t a flaw in the market, it’s the market. Every options trade is a leap into the fog.

The paradox is this: successful traders act with conviction not because they know what comes next, but because they’ve built processes that allow them to bet consistently when the odds lean in their favor.

Inside this week’s lesson:
✔️ Why certainty is usually a mirage, and comfort often signals poor odds
✔️ How conviction comes from process, not prediction
✔️ Why real edges feel uncomfortable, and why that’s a feature, not a bug
✔️ Four anchors for building conviction when the fog is thickest: quantify the edge, separate setup from outcome, size for survival, and journal the discomfort

Conviction under uncertainty isn’t bravado, it’s disciplined courage, backed by numbers, rules, and risk management.

👉 Read the full article at The Option Premium

📊 The Implied Truth: Weekly Table Overview

Unlock the Full Picture – Upgrade to access the complete table, including all 100 equities (AAPL, META, AMZN, NVDA and more)

Every number tells a story. Each week, we decode the landscape across the most liquid ETFs, because this is where retail traders get the cleanest signals and the least slippage.

But the power isn’t in the data, it’s in how you interpret it.

Below is your edge: a strategic overview that reveals where the premium is overpriced, where price action is exhausted, and where the highest-probability setups exist for the coming week.

This section is here to help you choose what works for your strategy. The numbers are facts, not opinions. Whether you sell premium, buy directional spreads, or trade reversals, the edge begins with understanding volatility and momentum. Let’s dig in.

What This Table Tells Us

• Use this weekly to guide your trade ideas, not predict outcomes.

• The data is factual. There’s no opinion in this grid, only opportunity.

• Choose what aligns with your timeframe, risk appetite, and edge.

What the Metrics Tell Us This Week

The market continues to press higher, but the underlying signals show a shift toward exhaustion in several corners. Breadth measures ($SPXA200R and $SPXA50R) sit near neutral, suggesting participation has cooled over the past few days even as the major indices climb. Overbought extremes are becoming hard to ignore, DIA, EFA, XBI, and XLV all flash RSI short-term readings in the 90s, historically a precursor to mean-reversion within days to weeks.

At the same time, volatility remains subdued. The VIX is pinned near 15 with an IV Rank just below 34, highlighting how little fear is being priced despite stretched conditions. Select pockets still carry edge, URA shows the richest IV Rank in the group, while energy (USO, XLE, XOP) holds elevated implied vol tied to commodity swings. Overall, the landscape is defined by overbought equities, cheap index volatility, and select sector-specific dislocations, a mix that typically leads to more opportunities for premium sellers as markets revert from extremes.

🧮 1. EFA – MSCI EAFE ETF (Developed Markets ex-US)

Why it stands out:

• Extremely overbought RSI: RSI(2) at 97.2 and RSI(7) at 77.3 put EFA in one of the most stretched conditions across all ETFs this week. Historically, that type of reading has a strong 5–10 day mean-reversion profile.

• Elevated volatility: IV Rank 21.6, IV Percentile 34.5%, not extreme, but enough to create better-than-average premium conditions in a fund that usually trades with subdued IV.

• Consistent HV/IV relationship: Historical volatility at 15% compared with implied at 20.9% confirms option prices are inflated relative to realized movement.

• Sentiment lean: P/C Ratio at 0.57 shows more call buying than put buying, often coinciding with crowded bullishness near peaks.

Supporting Data:

• Implied Volatility: 20.9%

• IV Rank: 21.6

• IV Percentile: 34.5

• Historical Volatility: 15%

• RSI: 97.2 / 77.3 / 66.4

• P/C Ratio: 0.57

🧠 Commentary:
EFA looks like a textbook overbought setup in international equities. When developed markets outside the U.S. stretch this far, reversions tend to be quick and sharp. Premium remains respectable, making this a high-probability opportunity for contrarian setups.

🧮 2. URA – Uranium ETF

Why it stands out:

• Elevated volatility environment: IV Rank 45.9 and IV Percentile 19.8, the highest IV Rank of any ETF this week, meaning option sellers are well-compensated for risk.

• Slightly oversold RSI: RSI(2) at 17.4, RSI(7) at 39.7, suggests selling pressure is already extended short-term. That makes this one of the few high-IV names where both premium and reversion potential line up.

• Historical volatility: At 30%, it keeps option pricing honest, there’s movement to justify the IV, but the current level makes options expensive relative to the ETF’s long-term baseline.

• P/C Ratio: 0.64, balanced to slightly call-heavy, leaving room for further repositioning if uranium snaps back.

Supporting Data:

• Implied Volatility: 36.4%

• IV Rank: 45.9

• IV Percentile: 19.8

• Historical Volatility: 30%

• RSI: 17.4 / 39.7 / 47.9

• P/C Ratio: 0.64

🧠 Commentary:
URA is a standout because it offers both expensive options and a contrarian oversold signal, a rare combination. Uranium has been volatile all year, but the current short-term dip against elevated IV gives traders an unusually attractive setup for high-probability positioning.

🧮 3. XBI – Biotech ETF

Why it stands out:

• Overbought extremes: RSI(2) at 98.3, RSI(7) at 78.8, RSI(14) at 67.3, across-the-board overbought, rarely sustainable in biotech given its mean-reverting history.

• Volatility pricing: Implied volatility at 24.5% with IV Rank 7.4 and IV Percentile 8.8 means options aren’t at peak pricing, but premiums are still elevated compared with realized movement.

• Sentiment gauge: P/C Ratio at 1.36, slightly put-heavy, suggesting hedging activity is already increasing as traders grow wary of how far biotech has run.

• Historical volatility: 18%, keeps option decay slower than metals/commodities but still profitable when paired with extreme RSI conditions.

Supporting Data:

• Implied Volatility: 24.5%

• IV Rank: 7.4

• IV Percentile: 8.8

• Historical Volatility: 18%

• RSI: 98.3 / 78.8 / 67.3

• P/C Ratio: 1.36

🧠 Commentary:
Biotech has a long record of sharp snapbacks after extreme moves. With RSI screaming overbought and sentiment starting to hedge, the probability of mean reversion is high. While IV Rank isn’t rich, the extremity of RSI readings makes this one of the best tactical setups of the week.

Quick Reference: The Implied Truth Table

📚 Educational Corner: Options Deep Dive

How to Avoid Thin Premium Syndrome and Still Get Paid

When volatility dries up, option premiums shrink, and for options sellers, that can feel like the income engine has stalled. The danger isn’t just smaller checks, it’s the temptation to bend the rules: moving strikes closer, stretching duration too far, or chasing high-beta names you wouldn’t normally touch.

This week’s article explores:

• Why low VIX compresses the volatility risk premium, and what that means for option sellers

• The behavioral traps that cause traders to take on hidden risks when premiums are thin

• A professional playbook for staying disciplined, including:

  • Hunting relative volatility, not just VIX levels

  • Adjusting position size instead of strike discipline

  • Using “synthetic premium boosters” like PMCCs, diagonals, and spreads

  • Measuring trades by annualized yield, not just raw credit

  • Filtering watchlists for tickers with persistent volatility patterns

Thin premium syndrome is a psychological test as much as a market condition. The pros adapt without abandoning discipline, positioning themselves to thrive when volatility inevitably returns.

👉 Read the full article here: Options Selling in a Low VIX World: How to Avoid Thin Premium Syndrome and Still Get Paid

🔗 Let’s Stay Connected

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Thanks again for reading. I hope you found today’s insights valuable and worth your time.

Trade Smart. Trade Thoughtfully.
Andy Crowder
Founder | Editor-in-Chief | Chief Options Strategist
The Option Premium