THE OPTION PREMIUM

Weekly Options Intelligence | May 24, 2026

I've been doing this for twenty-four years. Managing positions, studying the math, watching people get taken advantage of by an industry that profits from confusion. And after all that time, the thing I'm most proud of isn't a trade or a return. It's this newsletter. It's the fact that 400+ paid members and thousands of free readers found this place without me ever running an ad or making a promise I couldn't keep.

The last three months have been the strongest growth period The Option Premium has ever seen. Every new reader arrived the same way: organically. That means something to me. It means the work is earning its place, week after week, in inboxes that are already too full.

This issue hopefully earns it again. Nvidia beat by $2.4 billion and fell 1.9%, and I explain why that's the entire premium-selling thesis in one data point. The Small Dogs PMCC sleeve returned 65.50% last year and is tracking 10.70% this year with a stock down 35%. Annie Duke's framework for why judging decisions by outcomes is the cognitive trap that quietly destroys accounts. A redesigned Implied Truth section with a new ETF Trend Watchlist and Notable Readings dashboard. And articles on options premium, position sizing, and the covered call framework that I wrote to be the best versions of those topics anywhere.

For those ready to go deeper: The Implied Perspective ($129/month), Wealth Without Shares ($49/month), The Income Foundation ($9/month). All three for $149, or $1,495/year all-access.

I don't run ads. I never have. Every reader here arrived because someone they trust decided this was worth forwarding. If that's you, I'd be grateful if you sent this their way.

📰 What the Data Said This Week

Nvidia beat. The stock fell. The Dow hit a record. And the market strung together eight straight winning weeks for the first time since December 2023.

Wednesday evening, Nvidia reported Q1 revenue of $81.62 billion (vs. $79.19 billion expected) and EPS of $1.87 (vs. $1.77). Another beat. The eighth consecutive quarter of exceeding estimates. CEO Jensen Huang, fresh from his Beijing trip with Trump, outlined the Vera CPU roadmap and projected $20 billion in standalone CPU sales this year. He described a $3-4 trillion annual AI infrastructure opportunity by 2030.

The stock fell 1.9% the next day.

This is the "sell the news" dynamic that premium sellers understand instinctively. The implied volatility that drove SMH to 87.93% IVR last week got crushed the moment the uncertainty resolved. Nvidia's earnings were strong. The stock's reaction was irrelevant to the quality of the report. It was the volatility premium deflating as the event passed. Traders who sold premium ahead of the announcement collected that deflation as profit.

The week started ugly. Monday saw the Nasdaq and S&P 500 sink as the 10-year Treasury yield hit its highest in over a year. But by Wednesday, the market had recovered on Nvidia anticipation and a rally in discretionary (+2.39%) and tech (+2.11%). Thursday brought reports that a U.S.-Iran deal could be in sight, with Secretary of State Rubio saying there were "some good signs." Oil fell. The Dow rose to a new record close of 50,285.66. And Friday capped it: the Dow gained another 294 points to close at 50,580, its third new record of the week, as peace hopes continued to build.

SpaceX filed its S-1 for an IPO, the most anticipated listing in years. OpenAI is reportedly planning a confidential IPO filing at a $1 trillion-plus valuation. The IPO market is waking up.

For the week, the S&P 500 gained 0.4%, extending its winning streak to eight consecutive weeks, the longest since December 2023. The Nasdaq rose 0.2%, its seventh weekly advance in eight. The Dow gained 2.2% to a new all-time record.

The most important development for the broader market: breadth recovered. $MMFI surged from 49.74 back to 57.18, recrossing above 50 after cracking below it last week for the first time since the war recovery. $MMTH improved from 50.44 to 53.60. The breadth scare that dominated last week's analysis resolved quickly. The rally may still be narrow, but it's no longer cracking.

For premium sellers, the sell zone contracted slightly from 10 to 8 ETFs above 50% IVR as the post-Nvidia IV crush compressed semis premiums. SMH dropped from 87.93% to 77.56%. QQQ fell from 55.45% back to 42.21%, dropping below 50% again. But energy held its position: XLE at 77.03% and XOP at 74.56% are the richest premiums on the board. The VIX settled at 16.70, down 9.4% from last week's 18.43.

📅 The Week Ahead

The holiday-shortened week is heavy on data. Core PCE on Friday is Warsh's first inflation reading as Chair. With CPI at 3.8% and the bond market still digesting last week's yield spike, the PCE print will either confirm or challenge the "inflation is embedding" thesis. The Q1 GDP second estimate on Thursday will tell us whether the war's economic impact was worse or better than the initial read. Consumer Confidence on Tuesday, following last week's record-low Michigan sentiment at 48.2, will show whether the pessimism is deepening or stabilizing. Earnings season is essentially over. The data is what matters now.

📊 Weekly Market Stats

Where We Stand

No scoreboard this week. Just a reminder of what these publications actually are.

Two notes from readers that landed in the inbox over the past few days:

Notes like these arrive consistently. They are the reason there is rarely much pressure to lead with returns in this letter. Subscribers describe what the publications are doing for them in their own words, week after week, and that speaks louder than any percentage I could put on the page. The trade log is open. The numbers are always there for any subscriber who wants to look.

The three services, The Implied Perspective, The Income Foundation, and Wealth Without Shares, exist to teach. Each one covers a different corner of the options market with different mechanics and different time horizons, all built on the same principle of probabilities over predictions. Ideas, model portfolios, and trade alerts are the vehicles for that education. Every entry, exit, assignment, and roll lives in the open trade log, including the losers. That is the work.

📰 Weekly In-Depth Articles

🗓️ Tuesday: Put-Call Parity in Plain English

🗓️ Thursday: NVDA Earnings Tonight: A Pre-Earnings IV Crush Trade Walkthrough

🗓️ Friday: NVDA Earnings Follow-Up: Walkthrough of the IV Crush, the Exit Math, and the Discipline Traps After a Win

🗓️ The Research Desk

The Lazy Way: How a Five-Stock Small Dogs PMCC Sleeve Outearns Most Active Trading (Updated)

In May 2025, I opened five PMCC positions on the Small Dogs of the Dow. Bought five LEAPS. Sold short calls against them monthly. Managed the portfolio in roughly ten minutes per week. By year-end, the sleeve returned 65.50% on deployed capital. In January 2026, I rotated into the new year's five Small Dogs (KO, VZ, MRK, NKE, PG) and started the process again. Through late May, the 2026 sleeve is up 10.70%, and that includes a stock (NKE) that's down over 35%. MRK is the star: the premium engine converted a 12% stock return into a 41% PMCC return, adding 29 percentage points of income. NKE is down 38% on the PMCC, but without the premium overlay, the LEAPS would be down 60%. Five positions. Three personalities (runners, grinders, decliners). Four winners absorbing one significant loser. That's diversification working inside a structure designed for exactly this outcome.

👉 Read the article at The Option Premium.

Thinking in Bets: Probabilistic Thinking for Options Traders (Updated)

Annie Duke, former professional poker champion and cognitive psychology researcher, built her career on an insight that every premium seller needs: the quality of a decision has almost nothing to do with how it turns out on any single trial. A 70% probability trade that loses is not a bad decision. It's the 30% showing up. Duke calls the opposite error "resulting," and it's the cognitive trap that quietly destroys options accounts. The decision-outcome matrix has four boxes: good decision/good outcome (earned), good decision/bad outcome (variance), bad decision/good outcome (lucky, and dangerous), bad decision/bad outcome (lesson). Judge the decision, not the result. Over many trades, the math sorts everything out. Over any single trade, what feels like good news might be a warning.

👉 Read the article at The Option Premium

🎓 Options 101: What Is Options Premium? Where the Money Actually Comes From

The premium is the price of an options contract. When you buy, the premium is what you pay. When you sell, the premium is what you collect. That much is straightforward. What most explanations miss is what that premium is actually made of.

Every premium has exactly two components. Intrinsic value is the immediate, exercisable value: the amount the option is currently in the money. A $90 call on a $100 stock has $10 of intrinsic value. Time value is everything else: the market's estimate of what could still happen between now and expiration. It is uncertainty, priced as a dollar amount per share. When you sell an out-of-the-money option, you collect a premium made entirely of time value. From that moment forward, theta decay works in your favor. Implied volatility determines how much time value is available: high IV means richer premiums, low IV means thinner ones. This is why the framework starts with IVR and IVP before every trade. The premium is not incidental to the trade. It is the trade.

Income Foundation members start here. Understanding the premium is what makes every strategy work.

👉 Read the full article: What Is Options Premium?

🧠 Mental Capital: Why Position Sizing Is the Most Overlooked Edge in Trading

Most options traders who blow up do not have a bad strategy. They have a perfectly good strategy they sized wrong.

At an 80% win rate, a five-loss streak occurs roughly three times in every ten thousand trades. It's in your future. The only question is whether your account has structural room for it. At 5% risk per trade, five losses cost you 25% of capital. At 10%, you've lost half your account. At 2%, the same streak costs 10%, which stings but is not fatal. The 2% rule is not arbitrary. It's the direct answer to the consecutive-loss math. Position sizing does not generate alpha. It lets alpha exist. It doesn't pick the winning trade. It makes sure the losing trades don't bury you before the winners arrive. Three rules for every trade: define max loss before expected profit, divide your account by 50 for your 2% dollar cap, and pre-mortem your worst plausible streak.

👉 Read the full article: Why Position Sizing Is the Most Overlooked Edge in Trading

Educational Corner: The Covered Call Framework: Delta, Time, and the Decision to Roll

📈 Every Covered Call Decision Answers One Question: What Is My Exposure Right Now?

Delta tells you your current exposure. A 0.30 delta call has roughly a 30% chance of finishing in the money, moves about $0.30 per $1.00 in the stock, and represents the equivalent of being short about 30 shares on a directional basis. Three pieces of information for the price of one number. The 0.15 to 0.35 delta range is the sweet spot: below 0.15, you're selling lottery tickets (thin premium, no buffer). Above 0.35, you're essentially selling the stock with extra steps. For DTE, 25-45 days is the default for new entries: theta is meaningful, gamma is manageable, and you have time to make real decisions when the stock moves. Rolling has three signals: the call has lost most of its value early (close at 80-85% profit and redeploy), the stock is approaching the strike (roll up and out if the math works), or IV just expanded (roll out for a richer credit). Assignment is the system working, not failing. You set a price, the stock got there, you sold.

Income Foundation members see this framework applied in real time. Every trade archived.

👉 Read the full article: The Covered Call Framework

📊 The Implied Truth: ETF Watchlist

The Weekly ETF Volatility and Trend Intelligence Report

New here? Read the complete guide on how to read these tables: How to Read the Implied Truth Tables

The ETF scan shows a clear rotation: energy IV expanded sharply, semiconductor IV stabilized post-Nvidia, and persistent richness remains concentrated in a handful of single-sector ETFs. The broader indexes (SPY, DIA) remain IV-lean while the sector-level opportunities are some of the richest we've seen in weeks.

Top of the IV Rank scan: XLE (74.5%), SMH (74.7%), XOP (72.0%), URA (68.3%), XHB (66.7%), GDX (55.8%), EEM (56.2%), EFA (56.0%), XLF (55.7%), XLE (55.4%), XLP (54.5%), KRE (54.2%).

Notable Readings

Largest week-over-week IV Rank expansions: SMH +40 points (35.1% to 74.7%). XLE +36 points (38.9% to 74.5%). XOP +15 points (57.0% to 72.0%). XLK +13 points (36.9% to 50.0%). The semiconductor expansion came back after one week of contraction. The energy expansion reflects the ceasefire uncertainty returning to oil pricing as deal hopes remain unresolved.

Largest week-over-week IV Rank contractions: IBIT -43 points (47.8% to 4.5%). XLU -13 points. KRE -7 points. Bitcoin IV collapsed as the cryptocurrency pulled back 4.2% with little event catalyst. Utilities and regional banks normalized after the prior week's yield-driven spike.

Notable persistence: URA has now held above 60% IV Rank for five consecutive weeks, the longest stretch on the watchlist. Energy ETFs (XLE, XOP) reversed sharply from last week's weakening trend conditions, but elevated IV remains stubbornly high. The semiconductor IV expansion (SMH) returned after one week of compression, driven not by Nvidia specifically (the stock fell post-earnings) but by the broader AI capex narrative repricing expectations across the sector.

ETF Trend Watchlist

Sorted from most overbought to most oversold. Where momentum and premium intersect.

Most Overbought: Where Momentum Is Strongest

QQQ and XLK are the only ETFs with RSI above 70 and ADX above 25 simultaneously. QQQ's +DI at 37.7 vs -DI at 18.9 is a 19-point gap. XLK's +DI at 38.9 vs -DI at 18.7 is a 20-point gap. Both are classified as "Stretched," meaning premiums are available but the trend is extended. SMH sits just below at 68.7 RSI with ADX at 34, firm and still carrying 75% IVR post-Nvidia.

SPY's RSI at 68.8 with ADX at 26 reads as "Firm," meaning the uptrend is confirmed but not overextended. Eight straight winning weeks backs this up. The +DI/-DI gap of 16.6 points is healthy.

Most Seller-Dominated: Where Bearish Pressure Is Real

Three ETFs show clear -DI dominance with RSI below 50:

XLB: -DI at 31.0 vs +DI at 19.3 (12-point gap). Materials are under pressure.

GDX: -DI at 31.9 vs +DI at 20.9 (11-point gap). Gold miners declining as gold pulls back from highs. IVR at 55.8% means premiums are still available on the bearish side.

GLD: -DI at 33.7 vs +DI at 19.4 (14-point gap). The largest bearish directional gap on the board. ADX at 22 approaching confirmation.

TLT: -DI at 35.0 vs +DI at 22.6 (12-point gap). ADX at 34, the strongest confirmed downtrend. Bond yields remain elevated.

The Indexes: IV Lean, Trend Firm

SPY IVR at 22%. DIA at 23%. Both well below the 35% threshold. QQQ at 40% is the only index above 35%, but its RSI at 71.4 makes it the most "stretched" name on the board. The expected move on QQQ is $6.49 (roughly 0.9%) for the 30-day window.

Breadth: Recovered Above 50

$MMFI surged from 49.74 back to 57.18. $MMTH improved from 50.44 to 53.60. Both are back above 50. The breadth scare from last week resolved on the Friday rally driven by Iran deal hopes and the Dow's push to a new record.

The +DI/-DI readings on both breadth measures are roughly balanced ($MMFI: 31.85 vs 33.09; $MMTH: 27.82 vs 29.88), meaning the breadth trend is neutral rather than decisively bullish or bearish. The recovery is real but not yet confirmed by directional dominance. Watch for +DI to reclaim a clear lead for bullish confirmation.

The full Notable Moves section, this week's complete framework, and the 100+ equity volatility breakdown are available in The Implied Perspective.

👉 [Read this week's Implied Perspective at theoptionpremium.com →]

🎓 Coming Soon: PMCC Mastery

The complete implementation system: LEAPS selection, short call management, roll decisions, and every step from first position to sustained income. Followed by Credit Spreads and Wheel Strategy courses.

Reply "PMCC" to [email protected] for early access. Annual all-access members ($1,495/year) receive every course at no extra cost.

A Quick Note

A reader named Joe sent me a question this week that I turned into an entire article (this week's Educational Corner on the covered call framework). Three questions that were really one question wearing three hats: what delta, how far out, and when to roll. The answer to all three is the same: what is my exposure right now, and what does it need to be?

That's the kind of email that makes this work feel worth the weekend it takes to produce. If you have a question, send it. I read everything and I respond to everything. Some of them become articles. All of them make the newsletter better.

Thank you for your time. Thank you for your trust. See you next Sunday.

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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

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.