📩 The Option Premium Weekly Issue - August 24, 2025

Earlier today, just as I was wrapping up the last of my reports, the power went out. Normally, that’s an inconvenience you work around, pack up, head somewhere with Wi-Fi, and carry on. But not here in the Green Mountains of Vermont.

Living at a small ski resort has its charm, but it also means there’s only one road in and out. Earlier today, three utility poles came down at the base of that road, cutting power completely. No electricity. No internet. No way around it.

So for the first time since starting this service, I wasn’t able to get all of my newsletters out at the usual 6:00 p.m. I hope you’ll understand the delay, and more importantly, that you still find real value in this week’s editions.

You already know that consistent income in options trading isn’t about chasing lottery tickets, it’s about applying probability, discipline, and mechanics that work across cycles. That’s the foundation of everything I share with you in this free weekly letter. But here’s the truth: what I share here is only the surface. Inside my subscriber services, I take you deeper, into the real portfolios I trade, the precise strategies I use (from Wheel trades to Poor Man’s Covered Calls to volatility spreads), and the kind of step-by-step education you can’t find anywhere else without paying 10x the price.

Whether you want to build steady income, harness capital-efficient strategies, or finally learn how to integrate options into a long-term portfolio, I’ve built a tiered set of services to meet you where you are. Each one comes with real-time trade alerts, detailed commentary, and a focus on risk management that keeps you in the game for the long haul. If you’ve gained value from the free newsletter, imagine what it’s like to follow along with live positions, guided frameworks, and a community of traders learning together. That’s what my paid members experience every week, and I’d love for you to join us.

📉 Market Snapshot and Commentary

“When the Fed Blinks, Option Traders Should Listen”

This past week, the Fed finally opened the door.

In his Jackson Hole speech, Jerome Powell signaled what many traders had already begun to price in: a September rate cut is now on the table. Stocks rallied hard into the weekend, but what matters more for options traders isn’t the direction, it’s the shift.

Here’s what we’re seeing.

🔻 Why a Fed Cut Matters for Volatility

The probability of a September cut rose to nearly 90% after Powell’s speech. That means fewer hawkish surprises, and likely a lower volatility environment in the short term.

In this regime, premium may compress quickly on the front end, making it more difficult to harvest high theta without pushing risk. Rather than chasing weekly gamma, this might be a good time to think in terms of structured positions with positive theta and directional bias, like diagonals or broken-wing butterflies that lean long delta.

🛒 The Consumer Holds, For Now

Walmart, Target, and Home Depot all delivered solid earnings, mostly by leaning into value. Shoppers are still showing up, but they’re looking for deals. And while inflation is expected to tick up, it may be a one-off, no one knows for certain.

Retail earnings suggest margins are being managed well. For traders, this sets up more tactical opportunities on the consumer side, especially in names that show resilience while the market churns. We’re not chasing breakouts; we’re positioning for rangebound setups where time is your ally.

📉 Volatility = Opportunity (Even in Calm)

The S&P 500 is up 30% since April 8, an extraordinary run. But we’re also heading into the traditionally choppier months of September and October. Expect pullbacks. Plan for them.

Volatility doesn’t have to spike to create opportunity. When leadership rotates and implied vol lags realized vol, it can be an ideal time to:

• Fade overbought conditions using defined-risk call spreads

• Sell puts on names in rising sectors with high IV percentile

• Adjust PMCC ladders to lock in gains and reset for future cycles

💡 Final Word: Be a Trader, Not a Tourist

Everyone’s an optimist after a 30% rally. But when Powell speaks like a dove while inflation whispers behind him, the setup is more complex than it looks.

This market is still bullish, but it’s fragmented. Leadership is rotating, premium is recalibrating, and many traders are still anchored to what worked in June. That’s not where the edge is.

If you’ve been cash-heavy, you're not alone. But now may be the time to start rebuilding exposure, not all at once, but with patience and precision.

This is where the edge lives: not in predicting the Fed, but in reacting with discipline.

🧮 Weekly Market Stats

📰 Weekly In-Depth Articles 

🗓️ Tuesday, August 19th - Why Rolling a Short Call for a Small Debit Can Strengthen a PMCC

🗓️ Thursday, August 21st - Options Trading and Sports: Two Games of Probability, Preparation, and Psychology

🎓 Options 101: The First Steps to Trading

Buying Your First Put Option (Speculation 102)

If calls are about hope, puts are about fear. For many new traders, buying a put is their first taste of betting on a stock’s decline, profiting if shares fall, without the unlimited risk of shorting.

This week’s article walks through:

• How puts work in plain English, think of them as insurance policies

• The buyer’s mindset: defined risk, big upside if the stock drops

• The seller’s advantage: probability, time decay, and volatility premiums on their side

• The three hidden risks for put buyers: time decay, market drift, and overpriced fear

• Smart uses for puts: portfolio insurance, event-driven speculation, or high-conviction bearish views

For most traders, buying a first put is a rite of passage. It’s how you learn that trading isn’t about certainty, it’s about probability.

📘 Read the full article and learn when puts make sense (and when they don’t):
👉 Buying Your First Put Option (Speculation 102)

🧠 Mental Capital

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

The Seven Pitfalls That Derail Options Traders

Options trading rarely fails because of strategy alone. More often, it’s human behavior that sabotages results. Leverage, probability, and time decay magnify every decision, and even small lapses in discipline can erase months of gains.

This article highlights seven behavioral traps that repeatedly take traders off course: greed, impatience, fear, pride, complacency, envy, and overtrading. Each distorts judgment in a different way, from chasing oversized bets to copying others’ trades or mistaking activity for edge.

The habits that protect traders are surprisingly simple: size positions modestly, respect time decay, rely on probabilities over emotion, accept being wrong quickly, trade only when an edge is present, follow your own framework, and prioritize patience over constant action.

Survivors in options trading aren’t those who predict the future with precision. They are the ones who sidestep self-inflicted mistakes, preserve capital, and let probability, not impulse, do the heavy lifting.

👉 Read the full article: The Seven Pitfalls That Derail Options Traders (and the Habits That Prevent Them)

Learn why most traders fail not from strategy, but from behavior, and how you can avoid the same mistakes.

📊 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

🧮 1. XLE - Energy Select Sector SPDR

Why it stands out:

• RSI extremes: RSI(2) at 98.5, RSI(7) at 76.9, RSI(14) at 62.3 - energy rarely sustains such overbought levels without reverting.

• Volatility still reasonable: Implied volatility at 20.4% with IV Rank 11.2 - not sky-high, but enough to justify premium-taking in a sector that can move fast.

• Historical volatility at 15% keeps option pricing rich enough relative to realized movement.

• P/C Ratio at 0.79 shows moderate bullish skew, suggesting sentiment could be topping.

Supporting Data:

• Implied Volatility: 20.4%

• IV Rank: 11.2

• IV Percentile: 22.7

• Historical Volatility: 15%

• RSI: 98.5 / 76.9 / 62.3

• P/C Ratio: 0.79

🧠 Commentary:
Energy is extended across all timeframes, and when RSI hits the upper 90s, reversions tend to be swift. While IV isn’t extreme, the stretch in price action makes XLE one of the cleanest high-probability setups this week.

🧮 2. URA - Uranium ETF

Why it stands out:

• Highest IV Rank in the group: At 50.8, URA leads all ETFs, meaning options premiums are unusually expensive.

• Mixed RSI structure: RSI(2) at 86.2 suggests near-term overbought, but RSI(14) still sits near neutral at 52.5. This divergence often precedes choppy, tradable ranges.

• Historical volatility at 41% aligns with the inflated IV, uranium is genuinely moving.

• P/C Ratio at 0.66 is balanced, leaving room for sentiment shifts.

Supporting Data:

• Implied Volatility: 36.5%

• IV Rank: 50.8

• IV Percentile: 60.4

• Historical Volatility: 41%

• RSI: 86.2 / 56.0 / 52.5

• P/C Ratio: 0.66

🧠 Commentary:
This is a classic “high IV meets stretched RSI” setup. URA’s options are rich, and price action is extended enough to favor mean reversion plays. Among all ETFs, it offers the most compelling balance of premium and probability.

🧮 3. XLB - Materials Select Sector SPDR

Why it stands out:

• RSI extreme: RSI(2) at 97.7, RSI(7) at 73.9, RSI(14) at 62.5, another overbought cluster rarely sustained.

• IV supportive: Implied volatility at 8.6% may look low, but IV Rank 26.9 and IV Percentile 27.5 indicate premiums are elevated relative to its history.

• Historical volatility at 18% shows the underlying is moving more than implied, creating dislocation.

• P/C Ratio at 1.09 suggests bearish hedging is already creeping in.

Supporting Data:

• Implied Volatility: 8.6%

• IV Rank: 26.9

• IV Percentile: 27.5

• Historical Volatility: 18%

• RSI: 97.7 / 73.9 / 62.5

• P/C Ratio: 1.09

🧠 Commentary:
Materials are trading at an unsustainable pace higher. With RSI at near-max levels and premiums sitting above average, this looks like one of the more straightforward contrarian plays of the week.

✅ Summary Ranking

1. URA → best premium environment + stretched RSI = top opportunity.

2. XLE → extreme RSI cluster makes this a clean mean-reversion candidate.

3. XLB → overbought materials with supportive IV context.

Quick Reference: The Implied Truth Table

📚 Educational Corner: Options Deep Dive

The Hedge Fund Manager's Guide to Portfolio Protection

Hedging never feels good, until it saves your career. This week’s Educational Corner breaks down how professionals approach portfolio protection with options, not as a one-off trade but as a disciplined policy.

We walk through the trinity of protection:

• Position-by-position hedging for surgical precision when concentration risk is high.

• Portfolio-level put overlays for efficient, scalable protection across diversified holdings.

• Tail-risk hedges for true crash insurance that turns chaos into opportunity.

From beta-weighted sizing formulas to cost-control techniques like put spreads and collars, to the integration of overlays, financing engines, and tail sleeves, this roadmap explains exactly how hedge fund managers design resilient portfolios that survive flash crashes, pandemics, and grinding bear markets.

The key lesson: protection isn’t a view on the market, it’s a permanent policy. Done right, it keeps you in the game long enough to let your real trading edge work.

👉 Read the full article here: The Hedge Fund Manager's Guide to Portfolio Protection

🔗 Let’s Stay Connected

Have questions, feedback, or just want to say hello? I’d love to hear from you.
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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