📩 The Option Premium Weekly Issue - August 2, 2026

Last Sunday, this letter argued that the market had stopped grading earnings and started auditing budgets. This week the audit came back, and it was itemized, line by line, in the largest 48-hour repricing of the AI trade since it began.

Microsoft showed its receipts: revenue of $90 billion against an $87.6 billion consensus, Azure growing 43% and crossing $100 billion for the fiscal year, a contracted backlog that grew $51 billion in a single quarter. Then it did the one thing nobody expected from a hyperscaler in 2026: it cut its capital spending guidance, to roughly $175 billion from $190 billion. The stock rose 16.4% Thursday, its largest single-day gain since 2008, adding $483 billion in market value. Amazon went the other direction on spending, raising its capex outlook to roughly $220 billion, the biggest number in the industry, and gained 17% on the week anyway, because AWS grew 37%, its fastest in eighteen quarters, while operating margin hit a record 13.7%.

Meta missed earnings by $1.04 a share, guided revenue below estimates, and asked for more spending patience with less proof. It lost 9.3%. Apple beat on everything that already happened and fell 7% on what comes next: a forecast dented by supply constraints and rising component costs, which is what it looks like to sit on the cost side of the AI boom without the revenue side.

So the verdict is in, and it is more precise than "the market hates spending." The market is pricing capex the way a banker prices a loan: you can borrow as much as you want if you can show the income to service it. Microsoft showed the income and cut the borrowing. Amazon showed the income. Meta asked to extend the credit line. Apple disclosed it's been paying someone else's interest. Four reports, four different bills, one consistent auditor.

The other appointment kept its schedule too. The Fed held at 3.50-3.75% on a 9-3 vote, with all three dissents wanting to hike, and Warsh offered no forward guidance at all, which sent the 30-year yield above 5.19% and left September priced as a coin flip leaning hike. The VIX told the whole story of the week in three prints: 20.66 on decision day, 17.09 the morning after, 15.99 by Friday's close. Two Sundays of writing about selling insurance against appointments, and the market just ran the full demonstration: the premium inflated into the events, the events arrived on time, and the insurance expired into the hands of the people who sold it.

Two additions this week. First, by reader request from Christopher, a longtime professional asset manager whose suggestion was too good to sit on: The Implied Truth now includes a Buy Zone, the mirror image of the sell zone, flagging where options are historically cheap and what the trend says about whether cheap means opportunity or warning. Second, with August opening Monday, a look at what seventeen years of monthly data actually say about the two months ahead. Probabilities over predictions, in both directions now.

📰 What the Data Said This Week

Wednesday was the hinge. The Dow fell more than 800 points into and through Warsh's press conference, where "no tolerance" for elevated inflation and a refusal to give forward guidance pushed yields higher across the curve. Three dissents in favor of a hike is the most hawkish split of his tenure, and the market walked out pricing September at roughly 54% for a hike. Then, at 4:05, Microsoft and Meta split the tape in half: Microsoft up 8% within minutes of its release, Meta down hard on the miss.

Thursday was the payoff. Microsoft's 16.4% surge dragged semiconductors up 8% and the entire technology sector to a 5% gain, its best day since April 2025. The Nasdaq rose 2.8%, ending a six-day losing streak. The morning's data complicated the Fed picture rather than clarifying it: GDP grew just 1.5% annualized against 1.8% expected, while headline PCE eased to 3.7% and core held at 3.3%. Slowing growth, sticky inflation, a divided committee, and no guidance. That argument doesn't resolve until September 16, and every data print between now and then is live ammunition. The U.S. also launched a heavy wave of strikes against Iran on Thursday, and here is the tell worth filing away: oil fell 5.5% on the week anyway. When a market stops rallying on its own headline, the trade is crowded. We wrote that about semiconductors three weeks ago. It now applies to the war premium.

Friday sealed it: Amazon up 15% on the AWS acceleration, Apple down on its forecast, the KOSPI up nearly 18% overnight in one of the most violent single-session rebounds on record for a major index, and the S&P finishing a week that contained an 800-point Dow drop with a gain of about 1%. Underneath the calm surface, the dispersion was historic: Microsoft +21.8% for the week, Meta -6.5%, Apple -7.2%, Amazon +17%. An index can sleep through a week like that only when its largest components are canceling each other out. That is not stability. It is a tug of war at maximum tension, and the breadth data below shows the rope.

📅 The Week Ahead

After the loudest week of the summer, a quieter calendar with one sharp edge: every macro print now reports directly to the September 16 FOMC meeting, where a hike is priced near a coin flip. Friday's jobs number is the first hard evidence in that argument. AMD on Tuesday carries the last of the earnings-season event premium at a 75% IV Rank, and how it trades will tell you whether Microsoft's verdict re-rated the whole complex or just Microsoft. Then the calendar goes comparatively quiet until NVIDIA on August 26, which is already the most important scheduled moment left in the quarter. In between sits August itself, and the seasonal data below explains why the next section exists.

📊 Weekly Market Stats

🍂 The Season Ahead: August, by the Numbers

With July in the books, the calendar turns to the only two months that have averaged a loss since 2010. Before anyone reaches for a forecast, look at what the data actually says.

August has averaged -0.13% since 2010, with positive returns just 56% of the time, and September is weaker still at -0.52%. Stretch the record back to 1970 and August improves only slightly: an average of +0.16% with gains 57% of the time, against +0.75% and 60.6% for all months. But the average hides the texture. August's median return since 2010 is actually positive at +0.20%, while its average absolute move runs above 3%. Translation: August isn't reliably bearish. It's reliably unpaid. The market tends to move plenty and go nowhere, which is a different hazard than a decline and calls for a different response.

Scan the heatmap and the honest conclusion is variance, not destiny: August 2020 gained nearly 7%, August 2015 lost 6%, and most Augusts in between did very little loudly. For premium sellers, seasonality is a probability input, never a signal. The practical translation for the next eight weeks: size a notch smaller, give strikes a little more room than the expected move suggests, and treat the historically soft stretch as a reason for patience rather than prediction. The wheel keeps turning, the filters keep deciding, and the calendar gets a vote but never a veto.

Where We Stand

This week the spotlight belongs to the two quietest portfolios I run, because between them they just taught the loudest lesson in the entire operation.

The Small Dogs portfolio inside Wealth Without Shares is deliberately unglamorous: five blue-chip dividend payers, a January 2028 LEAPS call bought on each in the first week of January, and one short call sold against each position roughly once a month. That's the whole strategy. No scanning, no timing, no Wednesday nights spent watching futures. Call it the lazy way, because it is, by design: the January entries do the thinking once a year, the monthly roll takes about thirty minutes, and the filters pick the strikes. It's the training-wheels version of the poor man's covered call, and I built it for readers learning the strategy, because every mistake PMCC traders make eventually shows up in this portfolio in miniature, gets handled, and gets documented. The tickers stay inside the member portfolio, where they belong. The results and the lessons are free, and here they are with nothing omitted.

Through Friday, the five positions stand at +63.7%, +59.1%, +35.9%, +1.7%, and -38.6%. That last one is down because its underlying stock has lost more than a third of its value this year, and no options structure repeals gravity. The basket, one contract per position, cost $11,380 in January and has returned +20.1%. For scale: the S&P 500 has returned +9.6% this year, and simply buying the same five stocks as shares would have returned +7.1% on roughly four times the capital. Seven months in, the lazy way has more than doubled the market and nearly tripled its own underlying stocks, on a quarter of the capital, while carrying a 35% loser aboard.

Now the two lessons, because they're mirror images and this portfolio delivered both at once. The losing position is the seatbelt lesson. Its LEAPS alone is down 69%, a genuine drawdown on a genuinely broken stock. But the position sold a call every single month on the way down, all of them collected, and those premiums cut the realized damage to -38.6%. That's what the short call is for: it cannot save a broken stock, but it converts a catastrophe into a survivable loss, one month of rent at a time. The +59.1% position is the opposite lesson. Its stock ripped 30%, which meant nearly every short call lost money at the buyback, and traders who fixate on that number abandon the strategy right there. The position still nearly doubled its own stock, because the deep-in-the-money LEAPS did what the short calls never claimed to do. In a falling market the calls are the defense; in a rising one they're a toll you happily pay. One portfolio, seven months, both truths documented in public.

For the receipts on how this compounds, last year's Small Dogs portfolio closed in December at +65.5%, with positions ranging from +93.5% at the top to a single loser at -8.3%, printed next to the winners as always. And the All-Weather portfolio runs the identical engine on three uncorrelated asset-class sleeves instead of stocks. It stands at +15.5% dollar-weighted against the market's +9.6%, and it's carrying its bond sleeve at -26.1% to get there, which deserves a plain sentence: that sleeve hurts, and the watchlist below shows bonds carrying the most bearish trend reading on the entire board this week. The portfolio absorbs it and leads the index anyway, because holding uncorrelated sleeves means something is usually losing. That is not a flaw in all-weather construction. It is the definition of it.

📊 [Every trade, archived in real time, at theoptionpremium.com →]

📰 This Week's In-Depth Articles

👉 How to Use RSI to Time Options Trades (Without Fooling Yourself) →

👉 Lessons from Past Panics: What Three Historical Volatility Spikes Actually Taught Options Sellers →

The first piece confronts the most dangerous thing about the most popular indicator in trading: RSI works just often enough to keep you believing. Every seller has sold a call spread on an "overbought" stock and watched it rally another 15% through the strikes. The article shows how three RSI lookbacks used together, plus the expected move, turn a liar of an indicator into honest information, and why the divergence between them matters more than any single reading. After a week where Microsoft went from stretched to untouchable in one session, the timing writes itself.

The second piece is the one to read before the next VIX spike, and there will be a next one. Dot-com, 2008, and COVID all paid disciplined premium sellers, but the highlight reel omits the sellers who blew up in the middle, and it omits the three structural advantages that made Buffett's famous 2008 put trade survivable, none of which you have. This week's tidy little round trip from 20.66 to 15.99 was volatility on training wheels. The article is about the real thing.

🎓 Options 101: How to Sell Your First Covered Call

Twenty-one articles of foundation, and this is the one where theory becomes practice. The new 101 installment walks through placing an actual covered call, all six steps in the exact order you'll use them, on a realistic $87.50 stock: which approval level you need, why IV Rank gets checked before the chain is even opened, how the delta column becomes your strike-selection compass, what a fair fill looks like on a $0.20-wide spread, and the two management checkpoints that turn a single trade into a repeatable income process. There's also one question in step four that matters more than all the Greeks combined, and most first-time sellers never ask it. If you own 100 shares of anything and have never sold a call against them, this is the walkthrough that gets you from reading about income to collecting it.

👉 Read the full article: How to Sell Your First Covered Call →

🧠 Mental Capital: Assignment Is the Plan, Not the Failure

Eventually a cash-secured put you sold moves in the money, and what you do in that moment reveals whether you're running a probability business or avoiding one. This week's piece makes an argument that rewires how most sellers think: a "losing" CSP is a category error. If the strike was one you'd genuinely pay for the stock, assignment isn't the failure mode, it's the market handing you the fill you already wanted, at a discount. The article ranks the four possible responses, and they are emphatically not equal: one is the default, one is a narrow tool most sellers overuse because it feels productive while deferring the truth, one is a variant for the experienced, and one is reserved for a genuinely broken thesis. It also shows the roll math most traders never compute, the cumulative breakeven that a single roll credit quietly hides. For every Income Foundation member, and especially for Andrew and everyone else waiting on their first put signal, this is the mindset the strategy runs on.

👉 Read the full article: Managing a Losing Cash-Secured Put →

📐 Educational Corner: The Poor Man's Covered Put

Most portfolio hedges cost you money every day and pay off only if disaster arrives on schedule. This week's LEAPS Series piece covers the exception: the Poor Man's Covered Put, the bearish mirror image of the PMCC that Wealth Without Shares members already know by heart. Long-dated LEAPS put as the engine, short-dated put sold against it for income, meaningful downside protection at roughly 12% of the capital a short position would tie up, and, in the right volatility environment, positive carry: a hedge that pays rent while it waits. The worked SPY example includes the honest math most articles skip, including why the single-cycle income number cannot simply be multiplied by twelve, and the two environments where this structure quietly bleeds instead. After a week of historic single-name dispersion, heading into the softest two months on the calendar, knowing how to build protection that doesn't drain the portfolio is timely knowledge.

👉 Read the full article: The Poor Man's Covered Put →

💡 Did You Know?

The oldest piece of seasonal advice in finance was never about markets at all. "Sell in May and go away" began in the London of centuries past as "sell in May and go away, come back on St. Leger's Day," and it described the migration habits of English aristocrats, who left the city's summer heat for their country estates and returned for the St. Leger Stakes, a horse race first run in 1776 that remains the oldest classic race in the world. Trading thinned because the people who traded were literally gone. The American version quietly swapped the horse race for Labor Day, and an adage about aristocratic vacation schedules hardened into a market rule that still gets quoted every spring by people who have never heard of the race.

Does it hold? The data in this issue's seasonality section gives the honest answer: partially, and less than it used to. The summer months are genuinely weaker than the rest of the year on average, August and September in particular, but "weaker" has mostly meant flat and choppy rather than falling, and anyone who sold every May since 2010 sat out some of the strongest three-month stretches of the era. The adage survives because it's memorable, not because it's tradeable. What is tradeable is the version this newsletter runs every week: not a couplet about a horse race, but a filter that measures what premium actually pays, month by month, and lets the probabilities cast the vote. The aristocrats had the right instinct and the wrong instrument.

📊 The Implied Truth: ETF Watchlist

The Weekly ETF Volatility and Trend Intelligence Report

🔟 The Liquid Ten: The Post-Crush Edition

Last week this table was a picture of premium inflated and waiting. This week it's the after-photo, and three readings carry the intelligence. AMD at 75% is now the highest premium on the board because it's the last appointment of the season, Tuesday after the close. Apple at 62.9% post-earnings is the anomaly: premium that refused to crush is the options market keeping its guard up about that guidance. And NVIDIA at 36.7% with earnings August 26 is a premium cycle at its beginning; watch that number build for the next four weeks, because you now know exactly how the movie ends.

The Sell Zone: 7 Names, One Honest Warning

SMH (72.5%), XLK (68.6%), EEM (62.2%), XBI (59.2%), XLV (56.2%), QQQ (55.1%), XLE (52.8%). The zone thinned from 8 as the event premium drained, and what remains is mostly residue on broken trends: of the seven, only XLV and XLE pair elevated premium with +DI dominance. The rest are rich because they're wounded, which is a compensation, not an invitation. Note who left the zone entirely: SPY's IV Rank collapsed from 29% to 14.8%, closing the index premium window that's been open since mid-July.

🆕 The Buy Zone: Where Options Are Cheap

By reader request, the mirror image of the sell zone, and it debuts with the richest setup it may show all year. Screening for IV Rank at or below 25% with IV Percentile at or below 50%:

Cheap and trending (the LEAPS candidates): FXI (8.3% IVR, RS Above 70, +25.9 DI gap, riding the Asia surge that sent the KOSPI up 18% Friday), KRE (6.7% IVR with an IV Percentile of 1%, options nearly the cheapest they've been in a year on a regional-bank group still in an uptrend), XLF (13.8% IVR, ADX 30.5, the strongest trend on the entire watchlist), and DIA (13.3%).

Cheap and broken (the warning column): IBIT at 5.0% IVR with the trend -DI dominant and the fund down 28% on the year. The cheapest options on the board are cheap for a reason, and paying a low price for a falling asset is not a bargain. It's a discount on regret.

Credit where due: this section exists because Christopher, a reader who has spent a career in asset management, suggested extending the sell-zone logic to the other side. He was right. Cheap volatility with a confirmed trend is where long-dated options earn their keep, and the framework should say so every week. It will now.

Notable Readings

The great deflation: XLE's IV Rank fell 29 points (81.5% to 52.8%) as the war premium leaked out of energy even while the strikes on Iran escalated, and USO dropped 5.5% on the week. A market that stops rallying on its own headline is a crowded market. The energy trend is intact; the energy premium spike is over.

The stress moved to bonds: TLT carries a -DI reading of 45.3, the most bearish directional reading on the entire watchlist, with its IV Percentile at 78%. Equity volatility just crushed; bond volatility didn't. After a 9-3 Fed with no forward guidance and a 30-year yield above 5.19%, the options market has quietly decided the risk worth insuring now lives in the long end of the curve.

The round trip, completed: three weeks ago vol-of-vol at the 96th percentile flagged a spike; the spike came; last week the 7th percentile said the fear was fully priced; this week the VIX crushed 14% to 15.99. The full cycle, forecast to resolution, ran in twenty days, and the watchlist called both turns. That's not clairvoyance. It's what the percentiles are for.

The Trend Picture: The Survivors

The week's violence sorted the board cleanly. Still leading: XLF (ADX 30.5, the highest trend strength we track), FXI (the +25.9 gap is the widest bullish reading on the watchlist), XOP and XLE (energy trends intact despite the premium deflation), XRT and XLV. Broken and staying broken: TLT (-24.2 gap), TSLA-weighted discretionary, GLD (New Below 50, down 6.3% on the year), URA, and the semiconductor complex, where even Thursday's 8% bounce left SMH -DI dominant. SPY itself moved to New Above 50 RS, the index's first re-entry into positive relative strength since mid-July. The rotation didn't die this week. It got an itemized receipt.

The Indexes and Breadth: The Tell, at the Line

SPY at 14.8% IVR, QQQ at 55.1%, VIX at 15.99: the index premium window closed, and the market walks into the soft season priced for calm. Breadth is the counterweight: $MMFI at 51.67, down again, now 1.67 points above the 50 line with -DI heavily dominant, while $MMTH holds at 56.1. This is the fourth consecutive weekly decline in the short-term reading, and it's now close enough to the line that next week can answer the question directly. Above 50 through the jobs report, and the two-month rotation survives its hardest test yet. Below it, and the posture in this letter changes from finding premium to protecting capital. There is no third option, and we won't need to guess. The chart will say.

Everything above is the free edition, published every Sunday. The Implied Perspective ($129/month) adds the full 100+ name scan of highly-liquid assets with options behind the Liquid Ten and both zones, the individual stock setups, and the model portfolio with every entry and exit in real time. The Income Foundation ($9/month) teaches the Wheel from the first trade. Wealth Without Shares ($49/month) runs the LEAPS and PMCC portfolios the Buy Zone was built for. All three: $149/month, or $1,495/year with every course included.

📊 [Compare the three services at theoptionpremium.com/upgrade →]

The Bottom Line

The capex audit came back itemized, and the market revealed its actual rule: spending is neither rewarded nor punished. It is underwritten. Microsoft showed income and cut the borrowing, and collected the largest one-day gain in eighteen years. Amazon showed income and was approved for more. Meta asked for patience without proof and paid for it. Apple disclosed that it's carrying costs on a boom it doesn't fully own. Every future earnings call in this market now begins with the same unspoken question a loan officer asks: show me the coverage ratio.

The appointments all came and went on schedule, the premium sellers collected their rent, and the calendar ahead turns quiet and seasonal: a jobs report Friday that reports directly to a divided Fed, AMD carrying the last of the event premium Tuesday, NVIDIA building toward August 26, and two months of tape that history says will move plenty while paying little. The framework's response is already written in this issue: smaller size into the soft season, the sell zone for what's rich and trending, the new Buy Zone for what's cheap and rising, and the breadth chart at 51.67 telling us, probably within days, whether the rotation earns another chapter. Trade the probabilities, respect the line, and let August be August.

A Quick Note

A note arrived this week from Christopher, who has spent his career in asset management, holds the CFA designation, and reads, in his words, research from across the Street daily.

Christopher, thank you, and thank you twice: your buy-zone suggestion made this issue better, and it will make every issue after it better. That's the part of this work I treasure most. This publication isn't a broadcast. It's a conversation with some of the sharpest readers I've ever had, and the ideas flow in both directions.

To everyone reading: the response to this newsletter continues to humble me. I read every reply. If the work has taught you something, forward this issue to one person who'd benefit from a saner way to learn options or let your favorite group or forum know. That's how everyone here found it, and I wouldn't grow it any other way.

Thank you all for the ongoing support. I truly appreciate it.

See you next Sunday.

Andy

🔗 Let's Stay Connected

Have questions, feedback, or just want to say hello? I'd love to hear from you. 📩 Email me anytime at [email protected]

📺 Subscribe on YouTube so you'll be notified when the first videos are released.

👥 Join the private Facebook group or connect with me on X. Send me your topic requests, whether for the newsletter, YouTube, or webinars. Seriously, send them. 🙂

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

The Option Premium is published for educational purposes only and does not constitute personalized investment advice. Options involve risk and are not suitable for all investors. Past performance does not guarantee future results. Always confirm details and manage risk prudently.