📬 In This Issue of The Option Premium: Risk-On Rallies and Stretched Momentum - Where the Real Edge Lies Now

📬 A Quick Note Before We Dive In…

You may have noticed a few changes to The Option Premium lately — and you’re not wrong. I’ve been quietly (okay, obsessively) reworking the format behind the scenes. Each week’s issue now comes with a little more structure, a lot more clarity, and as always, the same commitment to providing real, actionable options insight.

This week, I’m excited to introduce a brand-new section: Options 101: The First Steps to Trading — designed specifically for those just beginning their options journey. It’s written in the same plain-English, no-fluff style you’ve come to expect, and I’ll be adding to it weekly as a growing resource for those new to options.

If you’re enjoying the newsletter, it means the world when you help spread the word — toss the link in a message board, share it with your trading group, post it on Reddit, Facebook, X, or send it to that one cousin who keeps asking what options trading actually is.

Bottom line — I want this to be the one options newsletter you can’t wait to read every week. That’s the bar I’m aiming for and I’m working really hard to achieve that goal. If you have feedback, ideas, or just want to tell me you made your first PMCC trade — hit reply. Every comment helps shape where this goes next.

Let’s get to it.

📉 Market Snapshot & Commentary

Markets roar back as tariff pressure eases and inflation fears cool (CPI & PPI). We break down what the soft CPI and PPI prints mean, why trade talks with China are fueling the rally, and how this new macro backdrop favors growth and tech exposure.

📰 Weekly In-Depth Articles

Tuesday: A practical guide to managing and rolling vertical spreads for consistent premium capture.
Thursday: Why chasing the highest premium isn’t always the smartest move — and how to structure smarter, risk-adjusted trades.

🎓 Options 101: The First Steps to Trading

We’ve added a new section to the newsletter called Options 101: The First Steps to Trading — built for those just getting started. The first article, “What Is an Option? A Plain-English Guide to Calls and Puts — Through the Eyes of an Option Seller”, walks through calls and puts from a premium seller’s perspective. It’s simple, clear, and designed to help beginners take their first step with confidence. This section will continue to grow with more foundational content to help new traders get to their first trade the right way.

🧠 Mental Capital

This week’s mindset piece dives into Van Tharp’s core belief: traders don’t just trade systems—they trade their beliefs. Learn how to audit your assumptions, align your strategy with your personality, and build mental capital that matches your edge.

📊 The Implied Truth

We break down this week’s most actionable ETF setups. With RSI strength across sectors and IV rising in selective areas, we spotlight three high-probability trades: SMH (momentum continuation), IYR (range-bound premium play), and FXI (contrarian reversion). Plus, what VIX is really signaling, and how breadth confirms the trend.

📚 Educational Corner: Options Deep Dive

The Poor Man’s Covered Call, Explained. We show how to structure this capital-efficient income strategy, avoid the most common mistakes, and integrate it into a diversified portfolio — with examples and step-by-step guidance.

📉 Market Snapshot & Commentary

Markets Find Comfort in Trade Progress and Inflation Trends

After weeks of headline-driven volatility, markets staged a decisive rebound. The S&P 500 surged 5.3%, the NASDAQ leapt 7.2%, and the Dow added 3.4%, as traders welcomed signs of trade thawing between the U.S. and China alongside favorable inflation data. New agreements suggest the peak in tariff tension may be behind us, with average U.S. tariff rates now tracking closer to a manageable 10%–15%. These developments, paired with the Fed’s continued pause on rate hikes, have reignited risk appetite—especially in tech, large-caps, and growth-oriented segments of the market.

From an economic standpoint, CPI and PPI data came in softer than expected, easing fears of runaway inflation. Core CPI is holding near 2.8%, and wholesale prices actually contracted for the month—underscoring that the inflationary impact of tariffs may be more muted than originally feared. Retail sales showed signs of consumer caution, but employment data and upward revisions in March’s sales help balance the narrative. Taken together, the economic backdrop appears to support a soft landing scenario, provided no major trade shocks occur.

💡 What This Means for Options Traders

Momentum is broadening, volatility is compressing, and opportunities are shifting. This is a market where participation strength matters more than price extremes. For premium sellers, that means adapting — targeting sector-specific setups (like SMH and IYR) with high implied volatility and structural ranges, while approaching stretched indices (like SPY and QQQ) with caution or defined-risk strategies.

This is not the time to sell premium blindly. Instead, lean into trades where volatility remains rich, RSI shows sustainable momentum, and breadth confirms trend health. Hedge where necessary, define your risk, and stay selective — the edge lies in structure, not speculation.

📊 Weekly Market Stats

🔹 Market Meter

🚨 Ready to Follow the Trades in Real Time?

If you’re ready for more—more structure, more detail, more guidance—I’d encourage you to take a look at the premium services. Each one is built around real portfolios, with trade alerts, weekly commentary, and the exact strategies I use myself.

No fluff. Just actionable trading and education—every single week.

Here’s what’s available:

• The Income Foundation – $9/month
  Built around the Wheel Strategy using cash-secured puts and covered calls — all for just $9/month. That’s less than two cups of coffee, and no one offers more value for less. Real-time trades, structured portfolio and weekly updates.  

• Wealth Without Shares – $49/month
  Capital-efficient strategies like Poor Man’s Covered Calls, managed across multiple portfolios. Three of our four positions are already showing double-digit gains. We’re steadily adding new trades each week as we build out all five portfolios. 

• The Implied Perspective – $129/month
  Advanced premium-selling strategies — including iron condors, jade lizards, bull puts, bear calls, and targeted earnings trades — all built around our core volatility metrics: IV Rank, IV Percentile, Expected Move, and more. Follow The Implied Truth tables? You’ll get exclusive access to our expanded dataset of 100 hand-picked equities. 

Thanks again for being part of this. I appreciate it wholeheartedly.
— Andy

📰 Weekly In-Depth Articles 

🗓️ Tuesday, May 13th: The Art of Rolling High-Probability Vertical Spreads: A Practical Playbook for Options Traders

🗓️ Thursday, May 15th:  Why Chasing High Premiums in Options Trading Leads to Bigger Risks (and How Smart Traders Avoid It)

🎓 Options 101: The First Steps to Trading

What Is an Option? A Plain-English Guide to Calls and Puts — Through the Eyes of an Option Seller

We just launched a new section called Options 101: The First Steps to Trading — built for anyone who’s new to options or looking to understand the basics more clearly.

Our first article breaks it all down in plain English:

👉 What Is an Option? A Plain-English Guide to Calls and Puts — Through the Eyes of an Option Seller

You’ll learn what options really are, how they work, and why selling premium gives you a consistent edge — without having to guess market direction.

💬 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.

We’ll be adding more articles to this series over the next few weeks — covering topics like how to choose your first strategy, how the Greeks work, and more — 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.

You Don’t Trade the Markets—You Trade Your Beliefs About Them

Too many traders chase strategies without ever examining the beliefs behind them.

This week, we explore one of Dr. Van K. Tharp’s most important insights: every trade you place is a reflection of your beliefs—about volatility, direction, probability, or decay. And when those beliefs are vague or out of sync with your strategy, it leads to second-guessing, overtrading, or abandoning systems that actually work.

Before we get into it, a quick word on Van Tharp himself. He was a pioneer in trading psychology—not for predicting markets, but for helping traders master their own mindset. His core message was simple but profound: long-term success doesn’t come from finding the perfect system, but from aligning your strategy with your beliefs, personality, and risk tolerance.

🔍 In this Mental Capital edition, you'll learn:

• Why most trading mistakes are belief errors—not strategy flaws

• How to uncover and audit the beliefs driving your trades

• A step-by-step process to align your edge with your mindset

• The critical difference between copied strategies and internalized conviction

Whether you’re trading iron condors, PMCCs, or the Wheel—this is a foundational mindset reset every options trader needs.

👉 Read the full article

Next week: We continue this series with Van Tharp’s most overlooked insight—why position sizing, not win rate, is the real driver of performance.

📊 The Implied Truth: Weekly Table Overview

Welcome to the most anticipated section of The Option Premium — your weekly guide to navigating volatility and transforming uncertainty into opportunity. Here, we break down the data, spotlight the most actionable setups, and lay out a clear, structured framework for premium-selling strategies. If anything catches your eye — or if you want to workshop a trade idea — I'm always just a message away.

Each week, we scan the most liquid ETFs for the best setups based on implied volatility (IV), IV Rank, RSI extremes, and price action trends. The goal? Help premium sellers and options strategists position around probability, not prediction.

Week Ending May 16, 2025

The current market isn’t just strong — it’s inclusive. Breadth metrics like $SPXA200R (55%) and $SPXA50R (77%) show healthy participation across stocks trading above their respective moving averages. This isn’t just a tech-driven rally; equal-weighted indices like RSP and sector ETFs like XLI, XLP, and XLU are confirming the move, with multiple ETFs hitting 100% on their high/low range graphs. That matters — because when everything rallies, it’s often a sign of macro tailwinds, rotation, or structural flows — not just temporary speculation.

Meanwhile, RSI readings across the board are elevated — but contextually, that’s a good thing. In strong uptrends, high RSI isn’t a reversal signal — it’s a display of strength. When you see RSI(14) readings in the 65–75 range while short-term RSI(2) is flashing into the 90s, that’s often a setup for sideways digestion, not immediate mean reversion. Traders shorting blindly into these signals often get run over by a slow grind higher. The smarter play? Fade only when premium is rich or structure is range-bound.

📊 Market Breadth Snapshot:

🚨 RSI Extremes (Overbought >90 or Oversold <10)

📉 VIX & Market Volatility

• VIX: 17.24

• IV Rank: 34.4

• RSI (2): 7.72 (deep oversold)

👉 Translation: Short-term volatility expectations have collapsed. Traders are complacent. This often precedes sharp mean-reversion or IV spikes, so selling premium here requires caution — hedge or define your risk.

📈 Top 3 Options Setups of the Week

✅ 1. SMH – Semiconductors

• IV: 35.47% | IV Rank: 18.2 | RSI(14): 71.51 | RSI(7): 84.22

• Insight: Semis remain the pulse of the risk-on trade, but we’re seeing short-term RSI saturation with premium finally catching up. A modest IV Rank suggests plenty of room for premium expansion — ideal for debit spreads or diagonals if we get any pullback.

• Actionable Trade: If you’re bullish, consider a bull put spread with a wide base. If neutral/bearish short-term, a broken wing butterfly can offer premium with protection.

✅ 2. IYR – Real Estate ETF

• IV: 32.95% | IV Rank: 28.4 | RSI(2): 84.96 | RSI(14): 58.89

• Insight: Real estate is climbing out of the rate-sensitive grave, with improving RSI trends across all durations. IV is elevated but not extreme, and the RSI stack (short-term high, long-term improving) favors a consolidation setup.

• Actionable Trade: Great candidate for short iron condors or strangles if you believe price will chop between 93–98 in the near term.

✅ 3. FXI – China Large Cap

• IV: 30.29% | IV Percentile: 18.2 | RSI(14): 57.16 | High/Low Graph: -20%

• Insight: FXI shows a deep mean-reversion opportunity. IV remains elevated, yet FXI is trading well below its 3-month highs, and RSI is stabilizing. It’s unloved, unextended, and under the radar.

• Actionable Trade: A contrarian put credit spread or bullish risk reversal offers asymmetric upside. If it rebounds even modestly, volatility crush will do the work for you.

💡 What This Means for Options Traders

This week’s edge is found in interpreting strength through participation, not just price. High RSI and strong breadth don’t mean a top — they mean a robust trend. The trick is not to sell premium indiscriminately but to target high-IV symbols with clear structural ranges or capitalize on laggards where volatility is mispriced. Look for momentum continuation in high-RSI names like SMH, premium-rich consolidation in IYR, and contrarian setups in outliers like FXI.

➡️ Stay selective. Size trades appropriately. Respect volatility's potential return.

📊 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

🎓 Topic of the Week: A Capital-Efficient Alternative with Real Portfolio Power

Covered calls are great in theory — until you realize buying 100 shares of AAPL or SPY ties up $20K+ just to collect a few dollars in premium.

That’s where the Poor Man’s Covered Call (PMCC) comes in — delivering covered call-style income with 65–85% less capital.

In this edition, we break down:

• Exactly how to structure a PMCC from scratch

• How delta, duration, and extrinsic value drive the setup

• The most common mistakes traders make — and how to avoid them

• Real examples using AAPL and SPY

• And most importantly — the portfolio-level benefits

✅ Diversify smarter: PMCCs let you spread risk across multiple stocks or ETFs, instead of concentrating it all in one ticker.
✅ Smooth income: Staggering short calls across tickers and expirations creates more stable cash flow.
✅ Maximize capital efficiency: Put your freed-up capital to work — whether that’s funding more strategies, holding dry powder, or compounding elsewhere.

If you’re building an income-focused options portfolio on limited capital or simply want a better strategy for diversification without the capital constraints — this is one of the smartest tools available.

👉 Read the full breakdown →

🔗 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