Growing Wealth Without Owning Shares

How we turned “renting volatility” into real dollars, using small, defined-risk option spreads instead of expensive stock positions.

We launched the Small Dogs portfolio with just under $10,000. By sticking to our mechanics, defined-risk credit spreads, disciplined deltas, quick profit-taking, it’s now up +39.9%. That’s about $3,881 in gains on a sub-$10k account, without buying a single share.

For context, the S&P 500 is up roughly +13% over the same window. Our approach delivered ~3.1× the index’s return (39.9% vs 13%) while keeping capital small, controlled, and repeatable. And that’s before counting positions in our other portfolios, which are up +34.5%, +75.1%, and +56.8%.

Most importantly, we’re not taking big swings at high-beta fliers. These results come from large, blue-chip names, using Poor Man’s Covered Calls (PMCCs), a capital-efficient, risk-defined approach that limits downside, recycles capital quickly, and lets consistency, not luck, do the heavy lifting.

Why this matters: cost to “own” vs cost to “rent”

Owning 100 shares is capital-hungry:

• SPY last $664.39 → $66,439 for a standard 100-share lot

• DIA last $461.78 → $46,178 for a standard 100-share lot

Instead, we rent the upside with PMCCs, buying a long-dated, deep-ITM call (our “synthetic shares”) and selling shorter-dated calls against it. Your capital at risk is the net debit (cost of the LEAPS minus the premium you collect), which is typically hundreds or low thousands, not tens of thousands.

Illustrative mechanics:
Buy a 12–18-month deep-ITM call (≈0.70–0.80Δ) for, say, $15.00 and sell a 30 to 45 DTE call for $2.00. Your net debit is $13.00 (=$1,300 per 1-lot). That structure gives you share-like exposure with defined capital, plus a steady stream of premium from the short calls.

Why it works in small accounts:

• Capital-efficient: You control “shares” for a fraction of the cash.

• Risk-defined: Max risk is the debit you paid for the LEAPS (adjusted by rolls).

• Cash-flow friendly: You can harvest 35 to 60% of the short call’s value and roll to the next cycle, compounding credits while the LEAPS does the heavy lifting.

In short: PMCCs let you run the covered-call playbook, steady income and upside participation, without tying up $46k-$66k in stock. You can build positions in high-quality names for 65 to 85% less than buying shares outright, making real diversification achievable in a small account.

📰 Market Commentary: Rally Fatigue, Premium Opportunity

Stocks finished the week higher (S&P +1.7%, Nasdaq +2.1%, Dow +1.6%), but the tone was choppier: tariff headlines, an ongoing government shutdown, and renewed questions around small regional-bank credit sparked a defensive bid. The VIX pushed above 20 at times, Treasuries rallied (10-year to ~4.00%), and intraday swings widened, classic signs of a tiring advance rather than a broken market.

What moved markets

• Macro noise: U.S.-China tariff rhetoric cooled a touch but remains unresolved; the shutdown rolled on, raising near-term growth and data-visibility risks.

• Financials split: Large, diversified banks mostly printed solid early earnings, while the KRE regional-bank ETF lagged on isolated credit-loss disclosures, keeping investors cautious on smaller lenders.

• Oil lower, breadth mixed: Crude slid again, easing inflation anxiety at the margin. Leadership narrowed to mega-caps while cyclicals were uneven, a typical late-stage rally pattern.

Why this still looks like a pause, not a peak

• Policy support (rate-cut path) + resilient earnings underpin the 2026 outlook. Early 3Q prints show a high beat rate, and profit growth is expected to broaden beyond AI/tech into 2026.

What to watch next week

• CPI (Thu, Oct 24): Any upside surprise could test the “soft-landing + cuts” narrative.

• Shutdown developments: The longer it persists, the more it dents Q4 activity and market confidence.

• Credit & breadth: Regional-bank headlines and % of stocks above the 50-DMA will signal whether weakness stays contained or spreads.

• Rates & vol: Follow the 2 to 10-year yield drift and whether VIX holds >20, both shape near-term risk appetite.

Bottom line: The tape looks tired, not terminal. Expect chop. Use volatility to rebalance and keep a quality bias while you wait for better entries.

📊 Weekly Market Stats

📰 Weekly In-Depth Articles 

🗓️ Tuesday, October 14th - Poor Man's Covered Call: How to Choose the Right Strikes

🗓️ Thursday, October 16th - Iron Condors & Butterflies: The Smart Trader's Guide to Probability-Based Income

🧭 The Earnings Playbook

(Educational and idea-generating for all readers)

Earnings Season Kicks Off: Big Banks and Big IV

Earnings week two is shaping up as a tidy demonstration of “event premium” without the frenzy, this is often the quieter stretch before the calendar really accelerates. You can see the pre-announcement volatility build most clearly in a handful of names with high relative readings versus their own year: QuantumScape and Intel into mid-week after-close reports, plus Dow Inc. before the open and Newmont after the close on Thursday. That combination, elevated IV sitting alongside lofty IV Rank/Percentile, offers a clean, real-time look at how markets price a wider distribution of outcomes ahead of results, and how that risk is set up to normalize once the numbers are out.

It’s also a good week to contrast absolute versus relative volatility. Tesla’s headline implied sits in the 60s, but its IV Rank and Percentile are mid-pack for Tesla, signaling options that aren’t especially rich by its own standards. Meanwhile, steadier names like Coca-Cola and AT&T show the opposite profile: modest absolute IV, but high percentiles that speak to meaningful relative event premium in quieter tapes. Halliburton slots into that “quietly elevated” bucket as well, where sector-specific uncertainty, not just beta, is doing the lifting.

Finally, liquidity and timing help explain how the repricing shows up on the tape. Ultra-liquid chains like Tesla and Intel tend to display crisper markets and more visible post-event volatility adjustments. After-close schedules (e.g., QS, TSLA, INTC, NEM) often reveal the shift from the close into the next session’s open, while before-open reports (CLF, HAL, KO, T, AAL, DOW, FCX) showcase the adjustment right at the bell. Put together, with week two’s typical lull before the heavier hitters crowd the calendar, this is a compact, useful snapshot of how uncertainty is priced and then released as the season gathers pace.

🧭 Earnings Season Options Trade: A Step-by-Step Guide: Explore the in-depth, quantitative approach to the best strikes, probabilities, and setups for earnings trades: learn the mechanics of the high-probability approach.

👉 For detailed frameworks, including delta targets, exit triggers, and trade structuring ideas, join the paid edition: The Implied Perspective. 

⁉️ Did You Know?

The “Expected Move” = Typical Range, Not a Prediction

Options quietly publish the market’s best guess of how far a stock is likely to travel by a given date. That guess is called the Expected Move (EM).

If a stock is $100 and the 1-week EM is ±$5, the options market says, “Most of the time, by next week this should end up somewhere between $95 and $105.” It’s a typical range, not a promise.

Why it matters

• For sellers: Putting short strikes just outside the EM aims for a higher win rate. If price tags EM early, consider reducing size, rolling, or tightening risk, the market is moving more than it priced in.

• For buyers: Your trade generally needs the move to be bigger than EM to overcome the premium you paid.

Quick rules of thumb

• One-glance estimate: The price of the at-the-money straddle (call + put) ≈ the EM for that expiration.

• Time scaling: More time = bigger EM, but not 1-for-1. Doubling time increases EM by about 1.4× (not 2×).

• Reality check: Big surprises happen. EM captures the usual moves, not the rare, outsized ones.

Use it like a pro

1. Check the EM for your chosen expiration.

2. Place strikes and size positions with that range in mind.

3. If price quickly breaks the EM, adapt, don’t hope.

Bottom line: Treat EM as a map of likely paths, not a destination. It keeps your strikes realistic, your sizing disciplined, and your expectations aligned with what the market is actually pricing.

🎓 Options 101: The First Steps to Trading

This week’s Options 101 article focuses on the one principle that quietly decides every trader’s fate, how much you risk, not what you trade.

Most beginners obsess over finding the perfect setup. Professionals obsess over survival. The piece explains why risking small, 1-5% per trade, isn’t playing it safe, it’s building longevity. You’ll see how simple math, discipline, and consistency protect both your capital and your mindset when the inevitable losing streak arrives.

It’s not about predicting the market or chasing excitement. It’s about making sure you’re still standing to trade the next opportunity.

Takeaway: Position sizing is what keeps traders in the game long enough for skill and strategy to matter. It’s not caution, it’s professionalism.

👉 Read this week’s Options 101 article to learn how proper position sizing transforms trading from speculation into a repeatable process built for long-term success.

🧠 Mental Capital

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

Thinking in Bets: Why the Best Traders Borrow from Poker

Great traders and great poker players share the same mindset, they focus on probabilities, not predictions. You can make the right decision and still lose; what matters is the quality of the process, not the outcome of one hand or one trade.

Like a poker player protecting their chip stack, traders must size positions to survive inevitable losses and avoid emotional “tilt” after setbacks. Your setup is your hand, and the market is your table, know when to play, when to fold, and when to sit out.

Takeaway: Trading success isn’t about being right, it’s about making good bets over and over again.

👉 Read the full article to learn how thinking in bets can make you a more disciplined, probability-driven trader.

📊 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.

Quick Reference

This Week’s Premium Landscape: IV, RSI, and Real Opportunities

What this week’s volatility metrics (IV Rank and IV%) coupled with multi-timeframe RSI data (2, 5, 9, 14) tell us about risk and opportunity.

New this week, more helpful trader metrics: I’ve added ADX/DMI alongside the IV and RSI set.

• ADX (Average Directional Index) measures trend strength (0–100) without caring about direction.

• DMI splits that direction into +DI (buying pressure) and –DI (selling pressure).
  

  Why you care:

• Options sellers (credit spreads, condors) use ADX/DMI to choose the right structure (bull puts vs bear calls vs condors), how far OTM to sell, and how wide to set wings.

• Options buyers (debits, calendars) avoid fighting strong ADX trends and time breakouts/continuations instead of fading strength.

🧭 Where Premium Sellers Should Be Looking

Volatility is back. VIX = 20.78. Across major ETFs, many IV Ranks sit in the 30–100 range, while short-term RSIs are mixed. That’s a good backdrop for defined-risk premium selling, but with discipline: wider wings, sensible deltas, and fast profit-taking.

Put-side (leaders; up-regime via +DI > -DI)

• GLD (IVR 94, RSI14 75, ADX14 42.9, +DI≫-DI)

• SLV (IVR 91, RSI14 68, ADX14 30.4, +DI>-DI)

• GDX (IVR 79, RSI14 58, ADX14 35.0, +DI>-DI)

• URA (IVR 100, RSI14 60, ADX14 42.1, +DI>-DI)

• XBI (IVR 35, RSI14 74, ADX14 47.9, +DI≫-DI)

Why these? Premium is rich (high IVR), trend strength is real (ADX ≥ ~30 in most), and buyers lead (+DI on top). You’re paid to sit farther OTM with the tape.

Seller’s play: Bull Put Spreads, 30–45 DTE, short 10–12Δ (especially when ADX is high), target 20–30% of width in credit, exit 40–60% or 21 DTE.
Buyer’s angle: If you play debits, bias to breakout/continuation (e.g., call diagonals/calendars) rather than fading.

Call-side (laggards; down-tilt via –DI > +DI)

• FXI (IVR 60, RSI14 49, ADX14 25.7, –DI≫+DI)

• USO / XLE / XOP (RSI14 ~33–41; –DI on top; ADX rebuilding)

• IBIT / KRE / XRT / XLB / XLI / XLF / HYG / RSP (RSI14 < ~50; –DI ≥ +DI or mixed)

Why these? Momentum is soft (RSI14 sub-50), sellers lead (–DI), and call premium is often attractive when IVR ≥ 30.

Seller’s play: Bear Call Spreads, 30-45 DTE, short 10-12Δ above supply, 20-30% credit, exit 40-50% or 21 DTE.
Buyer’s angle: If you buy options, keep risk tight (put calendars/diagonals) and don’t chase until DMI flips.

Condors (range/transition; ADX < ~25 or DI mixed)

• SPY, QQQ, SMH, DIA, RSP, EFA, XLI, XLB, XRT, HYG, VTI
  Why these? ADX14 sits near/below the “trend” threshold (SPY borderline ~26). Range behavior + mid IVR → iron condors work, but keep wings wide and profits quick.

Seller’s play: Iron Condors, 35–45 DTE, 12-15Δ each side, 25-30% of width in credit, exit ~50%.

Delta & width with ADX:

• High/rising ADX: go farther OTM (10–12Δ), wider wings, smaller size.

• Low/falling ADX: 12–15Δ ok, standard wings, still book wins fast.

📉 RSI Extremes (2, 5, 9, 14)

What RSI adds:

• RSI(2/5) flags very short exhaustion, good for entries (sell puts after small dips in leaders; sell calls after small pops in laggards).

• RSI(9/14) gives the backdrop, if this frame is strong and ADX is high, fading can be hazardous.

Oversold clusters (RSI2 low → watch for bounces)

IBIT (0.5), URA (16.6), USO (21.1), XOP (21.6), XLB (22.9).

How to use (with ADX/DMI):

• URA - Up-regime, ADX14 42.1 → Bull Puts on dips; short ~10Δ, wider wings, quick exits.

• IBIT/USO/XOP/XLB - Down/neutral regimes → Bear Calls on bounces; avoid trying to “catch the knife.”

Overbought clusters (RSI2/14 high → fade, but keep risk defined)

GLD (RSI14 75), XBI (RSI14 74), SLV (RSI14 68), XLV (RSI14 62), XLP (RSI2 80.9).

How to use (with ADX):

• Strong ADX leaders (GLD/XBI): prefer put-side income (bull puts) with conservative deltas rather than aggressive call caps.

• Moderate/low ADX names: small bear calls or balanced condors work as defined-risk fades.

⚡ VIX & Market Volatility

VIX 20.78 with firm 9-14-day momentum = sticky vol.
Implications for execution:

• When IVR ≥ 30, price near the top of your credit band (you’re being paid).

• Stagger entries across days; don’t deploy all risk at once.

• Pre-load OCO exits for 35-50% gains and “short tested” alerts.

🏁 Final Signals from The Implied Truth

• “Best setup” screen: IV Rank > 30 AND RSI(2) < 10.

  • IBIT qualifies strictly (but regime is –DI-led → use Bear Calls on bounces, not puts).

  • URA is a quality near-miss (IVR 100, RSI2 16.6) in a strong +DI/ADX uptrend → Bull Puts favored.

• Fade where RSI(14) > 70 to 75, but keep risk defined.

  • GLD, XBI fit the tag. Because ADX is strong, avoid naked upside caps, prefer conservative Bull Puts or balanced condors if you must fade.

• Breadth weak, vol elevated: ~42% of stocks above 50-DMA, ~55% above 200-DMA. Expect bounces, but position sizing matters most: start small, add only on favorable signals, and respect your exits.

ADX/DMI, Why We Added It (and how to use it, fast)

• The problem RSI can’t solve alone: RSI tells you “stretched or not,” but it doesn’t say whether a trend is strong enough to ignore the stretch. That’s where ADX comes in.

• The DMI edge: +DI > –DI means buyers are in control (bias to bull puts). –DI > +DI means sellers lead (bias to bear calls).

• Actionable thresholds:

  • ADX < 20 to 25: range → Iron Condors (12-15Δ) shine.

  • ADX ≥ 25 to 30: trend → pick a side (puts in uptrends, calls in downtrends), use 10-12Δ, wider wings, smaller size.

• Management trigger: If DMI flips against your position and 9-day ADX starts rising, treat it like a regime change, trim or exit quickly.

👉 For detailed idea generation, explore my curated list of highly liquid ETFs and equities in this week’s issue of The Implied Perspective, where I break down specific trade frameworks/strategies, delta setups, and portfolio integration for premium sellers.

📚 Educational Corner: Options Deep Dive

How to Build Your Own ‘Options Dividend Portfolio' Using Covered Calls and PMCCs

Over 20 years of teaching, I've noticed a recurring challenge: dividend portfolios yielding 3-4% often fall short of retirement income needs, yet moving to riskier assets isn't appealing. This week's article examines an alternative approach, using covered calls and Poor Man's Covered Calls (PMCCs) on the same quality stocks dividend investors already own.

What the article covers:

Sarah Martinez, a financial analyst, built a $125,000 dividend portfolio yielding 3.2% annually. After implementing systematic options strategies, her yield increased to 18.2% over 18 months, same stocks, different income method.

The article walks through:

• Covered call mechanics with a real Johnson & Johnson example showing 16% total returns versus 3.1% from dividends alone

• Poor Man's Covered Calls explained using Microsoft as a case study, $8,500 LEAPS position generating similar income to $42,000 in stock

• Portfolio construction details including the 50/50 allocation between covered calls and PMCCs

• Three primary risks that require careful consideration before implementation

• Academic research from University of Chicago and MIT supporting the probability-based approach

👉 Read the complete analysis

🔗 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