🗞️ In This Issue of The Option Premium: A Market Playing Tug-of-War 

📉 Market Snapshot & Commentary
Markets rallied on the back of strong tech earnings, but tariff headlines reintroduced macro risk, creating a classic tug-of-war. This week’s commentary breaks down what’s driving bullish skew in QQQ and SMH, where volatility is quietly creeping in, and how options traders can position around rangebound setups, call-side premium, and trade-fueled IV spikes.

📰 Weekly In-Depth Articles
Two pieces to sharpen your edge: the first walks through how probability, not prediction, drives long-term success with the Law of Large Numbers approach. The second simplifies IV Rank and IV Percentile so you can stop guessing and start using them as trade filters. Read these if you want to stop gambling and start compounding.

🎓 Options 101: The First Steps to Trading
Time isn’t just part of the trade, it is the trade. This week’s lesson explains options expiration in plain English, why Theta matters, and how to avoid rookie timing mistakes. Whether you’re rolling, holding, or managing risk, this is your foundation.

🧠 Mental Capital
Drawdowns without drama. This week’s framework shows you how to stay disciplined during cold streaks using structured self-review, tactical position sizing, and performance-based adjustments. For traders looking to build emotional resilience, not just trade setups.

📊 The Implied Truth
This week’s volatility landscape favors selectivity. We highlight overbought setups in GDX and HYG, oversold opportunities in IBIT and XOP, and premium-rich neutral plays in biotech and retail. Plus, a speculative window in healthcare (XLV) with asymmetric upside and contrarian positioning.

📚 Educational Corner: Options Deep Dive
We break down the math that powers the Poor Man’s Covered Call. If you’re serious about capital-efficient income, this is your blueprint: Delta for directional exposure, Theta for consistent paydays, and Probability for disciplined execution. No fluff, just the mechanics.

📉 Market Snapshot and Commentary

Markets pushed higher last week, led by strong tech earnings, even as tariff headlines returned to the front page. It’s a familiar tug-of-war: earnings push markets up, macro risk pulls them back down.

The S&P 500 rose 1.9%, the NASDAQ added 2.0%, and the Dow gained 1.6%, recovering ground lost earlier in May. That brings the S&P up nearly 6% for the month and slightly positive on the year.

But the surface strength masks a deeper message for options traders: IV pockets are re-emerging, and we’re entering a two-sided market where rangebound setups, call skew, and macro-driven volatility open the door for high-probability spreads.

⚙️ Tech Earnings: Still Carrying the Market

If you're looking for a primary driver of this rally, it's still tech, and more specifically, AI-driven capex.

• NVIDIA once again crushed estimates, with a 73% jump in data center revenue.

• Demand for AI chips from Microsoft, Meta, and Amazon remains strong despite trade pressures with China.

• The top four mega-caps, Microsoft, Meta, Google, and Amazon, confirmed they’ll spend over $330 billion on capex in 2025, most of it AI-focused.

📌 Our take: That kind of spending isn't just noise. It reinforces a long-duration trend and fuels bullish skew in QQQ, SMH, and NVDA. If you're selling premium, this is a greenlight for bear call spreads outside resistance or iron condors with elevated call-side premium.

🌏 Tariffs Are Back—and So Is Vol Uncertainty

While tech earnings eased some nerves, the trade narrative remains unsettled:

• The U.S. delayed 50% tariffs on EU goods until July 9, but talks with China remain stalled.

• A federal appeals court reinstated Trump-era tariffs under the IEEPA, reversing a lower court decision.

• The administration is exploring new restrictions on China’s tech sector, which could further ripple into semis and industrials.

📌 Our take: This isn’t 2018’s trade war, but the volatility structure says it rhymes. Look for underlying ETFs and equities with elevated IV while price action remains relatively stable, an ideal setup for defined-risk premium trades. Don’t overreach. Let headline-driven implied vol work for you.

💡 Broader Earnings Picture: Solid but Cautious

S&P 500 earnings are on pace for mid-to-high single-digit growth in 2025. Nine out of 11 sectors are expected to show positive YoY earnings.

Still, tariff and inflation risks are tempering the outlook, especially for sectors exposed to global trade.

📌 Our take: So far, companies are managing costs well. But if tariffs escalate, we may see input cost pressures return and margins soften. If that happens, volatility ticks higher, and directional bets become more dangerous. Stick with spreads that define your edge and your risk.

📉 Inflation Update: Steady Progress

Headline PCE inflation came in at 2.1% YoY, below expectations and close to the Fed’s 2.0% target. That’s good news. It also suggests the Fed may not need to hike further, and if growth cools, modest cuts could come in 2026.

📌 Our take: As inflation comes down, bond proxies like XLU and TLT become more attractive. We’re watching for bull put spread setups in defensives, especially if yields keep drifting lower.

🗓️ No “Sell in May” This Year

The old saying didn’t hold up this time.

The S&P 500 rose nearly 6% in May, despite starting the month in the red. Historically, a strong May has been a bullish signal: six previous Mays with 5%+ gains were followed by positive 12-month returns every time.

📌 Our take: Don’t let seasonality drive your decisions, but don’t ignore history either. If volatility rises in the coming weeks, use it. High IV, especially when unconfirmed by realized vol, is the sweet spot for premium sellers.

📊 Weekly Market Stats

🔹 Market Meter

🔭 Final Thought

We're watching a market in transition, driven by earnings strength but held in check by trade uncertainty. That’s not a warning; it’s an opportunity.

For options traders, this is the type of environment that rewards defined risk, patient setups, and volatility-aware structures. Don't chase. Prepare. The next few weeks could offer some of the best premium-selling environments of the summer.

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📰 Weekly In-Depth Articles 

🗓️ Tuesday, May 27th: From Options Gambling to Statistical Profits: Law of Large Numbers Method

🗓️ Thursday, May 29th: How to Read (and Use) IV Rank and IV Percentile Without Getting Confused

🎓 Options 101: The First Steps to Trading

📚 Options 101: Options Expiration Explained – What Every Trader Must Know

In options trading, direction gets the attention—but time holds the edge.

This week’s Options 101 dives deep into the expiration date, the ticking clock behind every trade. Too many new traders chase moves without understanding the timeline they’re betting against. But expiration isn’t just a detail, it’s the foundation of strategy, pricing, risk, and your edge.

📅 Learn how expiration shapes Theta decay, impacts strategy selection, and determines whether you get paid, or punished.
🧠 Understand intrinsic vs. extrinsic value, and how time value vanishes as expiration nears.
🔁 Master the decision-making behind rolling, managing risk, and resetting your trades like a pro.

If you’re buying options, expiration is the enemy of hesitation.
If you’re selling options, it’s the clock working in your favor.

👉 Read the full guide and start trading time as strategically as you trade direction.

Options Trading 101: Options Expiration Explained - What Every Trader Must Know

💬 Got questions after reading? Leave a comment on the article page! That way, others can learn from the discussion, join in, and we can build a stronger community together.

I will be adding more and more articles to this series , covering topics like how to choose your first strategy, how the Greeks work, and more, basically all things options, all in the same clear, plain-English style you expect from The Option Premium.

🧠 Mental Capital

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

🧠 Mental Capital: Building Resilience in Tough Markets

Some of the hardest stretches in trading aren’t crashes or black swans, they’re the quiet losing streaks. The setups are solid. The mechanics are sound. But trade after trade, the market just isn’t cooperating.

This week’s Mental Capital digs into a practical framework for getting through those periods without breaking your rules, your system, or your mindset.

You’ll learn:

• Why shrinking size is often the smartest response to uncertainty

• How to assess performance without tying your identity to your P&L

• What a real post-trade review looks like (and what it isn’t)

• Tactical tools like the Half-Size Rule and Weekly Self-Review template

• How to separate market feedback from emotional noise

You don’t need more motivation. You need structure and clarity when things aren’t working. That’s what this framework delivers.

👉 Read the full piece - Mental Capital: Building Resilience — The Mental Framework for Challenging Markets

📊 The Implied Truth: Weekly Table Overview

This Week's Premium Landscape – IV, RSI, and Real Opportunities

Welcome to this week’s data-driven breakdown for options traders. Every ETF below has been filtered through the most reliable combination of signals used by pro-level traders: RSI levels, IV Rank, IV Percentile, and Put/Call Ratios.

These indicators help us determine:

• Is price overextended or oversold?

• Are we being paid enough to sell options here?

• What’s the sentiment beneath the surface?

We’re in a market environment where extremes are rare- but meaningful. This week’s edge lies in selective premium selling and one tactical speculation opportunity for traders comfortable with risk-reward asymmetry.

🟢 Overbought + High IV

Fading strength where options are expensive and momentum is stretched.

✅ GDX – Gold Miners ETF

• Price: $50.65

• RSI(2): 81.77 | IV Rank: 38.4 | IV Percentile: 66.2

• Put/Call Ratio: 0.315
  GDX is one of the few names showing classic “fade strength” characteristics. Overbought RSI(2) combined with high IV Rank provides options sellers a clear edge, particularly in bearish or neutral setups.

✅ HYG – High Yield Bonds ETF

• Price: $79.57

• RSI(2): 89.62 | IV Rank: 7.6 | Put/Call Ratio: 3.544
  Even with low IV Rank, the extreme RSI(2) and panic-like hedging activity suggest this rally is stretched. Options may not be rich, but the behavioral excess is notable.

🔴 Oversold + High IV

Fear is high, prices are weak, and sellers are paid to step into discomfort.

✅ IBIT – iShares Bitcoin ETF

• Price: $59.46

• RSI(2): 9.65 | IV Rank: 31.5 | Put/Call Ratio: 0.461
  With RSI(2) in single digits and a sellable IV Rank, IBIT represents the strongest oversold + high-vol setup. Sentiment appears disengaged, which can favor premium collection into weakness.

✅ XOP – Oil & Gas Exploration ETF

• Price: $119.55

• RSI(2): 18.94 | IV Rank: 27.9 | Put/Call Ratio: 4.233
  XOP continues to grind lower with increasingly bearish positioning. Premiums remain attractive, and fear is clearly priced in. Strong candidate for risk-defined income plays.

🟡 Neutral RSI + Elevated IV

Premium is high but price is stable. Classic setups for condors, straddles, and neutral positioning.

✅ XBI – Biotech ETF

• Price: $79.19

• RSI(2): 38.21 | IV Rank: 26.2 | IV Percentile: 75.8
  XBI is quietly offering high implied volatility in a sideways chart. It’s a model environment for time-based neutral trades with high win rates.

✅ XRT – Retail ETF

• Price: $75.93

• RSI(2): 44.65 | IV Rank: 20.1 | IV Percentile: 79.4
  Options premiums are richer than they appear at first glance. RSI is unremarkable, but in premium-selling, that’s a feature, not a bug.

💥 Speculation Buy of the Week

Asymmetric upside based on sentiment, momentum, and volatility compression.

🟩 XLV – Health Care ETF

• Price: $132.64

• RSI(2): 78.30 | IV Rank: 37.3 | IV Percentile: 97.2

• Put/Call Ratio: 2.99

Why it matters: Health Care is near the top of its short-term RSI band, but unlike other overbought names, it's facing extreme put buying and has implied volatility sitting in the 97th percentile. This suggests positioning is defensive despite strength, often a precursor to breakout continuation when sellers get squeezed.

Options implication: This is a speculation window, not an income play. Long call verticals or directional calendars could work here with tight risk management.

📌 Final Takeaways

This week isn’t loud, but it’s strategically useful. You’ll find opportunity in:

• Fading gold miner strength (GDX)

• Stepping into crypto weakness (IBIT)

• Capturing biotech premium (XBI)

• Speculating on a quiet sector rally (XLV)

📈 The best traders this week won’t chase, they’ll focus on extreme setups where probability, volatility, and timing align.

📊 Quick Reference: The Implied Truth Table

Use this to spot volatility trends, premium opportunities, and momentum shifts at a glance. 🚀

📚 Educational Corner: Options Deep Dive

🎓 Educational Corner: The Mathematics Behind Poor Man’s Covered Calls: Delta, Theta, and Probability

Most options traders talk about “risk management” and “premium collection” like slogans. But slogans don’t generate returns, math does.

This week’s Educational Corner breaks down the real engine behind the Poor Man’s Covered Call (PMCC): Delta, Theta, and Probability. No hype, just tactical insight.

📊 Delta tells you how bullish your position really is, not how bullish it feels.
⏳ Theta is the paycheck, but only if you structure your trades correctly.
🎯 Probability doesn’t promise wins, it rewards discipline.

If you want to trade like a professional, you have to think like one. That means treating the PMCC not as a workaround, but as a mathematically grounded strategy built for capital efficiency, directional control, and income generation.

This isn’t about excitement. It’s about execution. If you’re ready to trade with edge, not ego, this one’s for you.

👉 Read the full breakdown - The Mathematics Behind Poor Man’s Covered Calls: Delta, Theta, and Probability

🔗 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]

📘 Join the conversation on Facebook.
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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