Before We Get Started…

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After 24+ years as a professional options trader I’m all-in on building a serious options education and income resource for traders and investors. Every issue, every table, every trade or portfolio breakdown is part of a bigger body of work designed to help you think in probabilities, manage risk, and trade with a clearer process. Practical strategies with realistic returns.

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📰 Market Commentary & Snapshot

Market Commentary & Snapshot

This past week was all about the Fed, market leadership, and what “mid-teens volatility” actually means for options income traders.

On Wednesday, the Fed delivered its third rate cut of 2025, trimming short-term rates by another 0.25% and signaling they’re likely closer to a pause than the start of a long, aggressive easing cycle. Short version: policy is easing, but the Fed is still very aware of inflation and a softening labor market. That’s a friendly backdrop for stocks, but not a blank check.

Equities reacted in stages. Early in the week, we saw the usual “Fed optimism” trade: DIA and SPY pushed toward (and in some cases through) record highs, while IWM (small caps) continued to benefit from the idea of lower borrowing costs and a softer landing. By the end of the week, though, the tone shifted. Mega-cap tech and AI-heavy names finally showed some fatigue, with headlines focused on big semis and AI leaders giving back ground and dragging QQQ lower.

So we leave the week with:

• Dow / SPY: still hovering near highs.

• Nasdaq / QQQ: under pressure as investors question how much AI optimism is already priced in.

• Small caps / IWM: quietly pushing to or near new highs as money rotates into more rate-sensitive, domestically focused names.

Volatility stayed in a sweet spot. The VIX finished in the mid-teens, around 15 to 16, which is low compared to crisis periods but a touch higher than the absolute lows we’ve seen at other points in this cycle. In other words, we’re still in a premium selling-friendly environment, just not a panic-driven one.

On the rates side, the 10-year Treasury yield is hovering near 4%, basically unchanged on the week and modestly higher on the year. That combination, easier Fed, but longer rates refusing to collapse, fits the soft-landing story: growth hasn’t fallen off a cliff, inflation isn’t fully conquered, and the bond market isn’t pricing in a deep recession.

Internationally, developed markets (MSCI EAFE) continued to participate, helped by the global rate-cut narrative and a weaker dollar earlier in the month. That matters to us mostly through diversified holdings and any PMCC or Wheel positions tied to multinational names.

What It Means for Readers of The Option Premium

For our community, three big takeaways:

1. Rotation matters more than the headline index.
   Leadership is clearly shifting away from a handful of AI darlings toward financials, cyclicals, small caps, and “normal” businesses with real cash flows.

   • For Wheel and cash-secured put traders: there’s more opportunity outside the usual mega-cap tech suspects. You don’t need to force trades in crowded AI tickers when highly-liquid small caps and value names are finally seeing flows.

   • For PMCCs and LEAPS: this is a reminder to focus on business quality, cash flow, and reasonable valuations rather than chasing whatever just had the best AI headline.

2. Mid-teens VIX = “steady income,” not “home-run lottery.”
   With the VIX around 15 to 16, we’re not getting the monster premiums you see during panics, but we are getting consistent, repeatable credit on SPY, QQQ, IWM, and liquid equity names.

   • This is a classic iron condor / credit spread environment: you can systematically sell premium around expected moves without needing to “swing big.”

   • For the Wheel, you can still sell puts at strikes you’d be happy to own, just don’t stretch too far down the quality spectrum chasing yield.

3. Lower Fed funds + sticky long rates = respect risk, don’t romanticize it.
   A friendlier Fed doesn’t remove risk, it just changes its shape. With long rates still near 4%, discounted cash flows still matter, and companies with weak balance sheets don’t magically become great businesses because policy is slightly easier.

   
   What does all this mean?

   • Keep position sizes reasonable.

   • Respect sequence risk, you can still string together multiple losing trades in a row, even with an 80% probability strategy.

   • Use diversification across strategies (PMCCs for long delta, Wheel for measured income, spreads/condors for non-directional premium) so one theme doesn’t dominate your risk. Diversify approaches (strategies), not just portfolios.

Looking Ahead: The Coming Week

Next week, the market shifts from “What did the Fed say?” to “Does the data support it?” We’ll get more labor and inflation-related releases, including employment data and cost indicators that will help confirm whether the Fed’s softer stance is justified.

Here’s how I’m thinking about it from an options-income lens:

• For index trades (SPY, QQQ, DIA, IWM):
  I’ll continue to lean on defined-risk credit spreads and iron condors rather than naked short options around data days. With mid-teens VIX, the edge comes from repetition and sizing, not from selling the absolute closest strikes into every event.

• For stock-based income (Wheel, cash-secured puts):
  I’m more interested in names participating in the rotation, financials, industrials, select small caps, where lower rates are a tailwind and valuations aren’t at nosebleed levels. I still want clear levels, liquid options, and business quality, but we don’t have to crowd into the same five tech names.

• For PMCCs / LEAPS:
  The combination of a friendlier Fed and ongoing dispersion across sectors favors laddered entries and staggered expirations rather than dropping into everything at once. In other words, keep building your long-delta “core” thoughtfully, not emotionally.

As always, my goal with The Option Premium is simple: help you translate weeks like this, Fed cuts, rotations, headlines, into practical, probability-based trades that fit inside a risk-managed framework. You don’t need to predict the next headline. You just need to consistently sell good risk, in the right size, in markets that are still paying you to show up.

📊 Weekly Market Stats

*MSCI EAFE stats are proxied using EFA (iShares MSCI EAFE ETF), which closely tracks the index.

📰 Weekly In-Depth Articles 

🗓️ Tuesday, December 9th - Overbought Markets and Bear Call Spreads: Hedging the S&P 500 (SPY) Without Going Full Bear

🗓️ Thursday, December 11th - After the Fed Cut: An Options Income Playbook

🎓 Options 101: The First Steps to Trading

Options 101: How to Think in Probabilities, Not Absolutes

This week’s article highlights the mindset shift that separates long-term traders from the ones who burn out, moving from prediction and conviction to probability and survival. Through real examples, academic research, and practical math, we look at why being “right” about direction matters far less than sizing trades correctly, understanding expected value, and giving your edge enough time to materialize. High win rates don’t protect a trader who sizes too large, but small, consistent risk applied across dozens of trades lets probability, and the law of large numbers, work in your favor. The message is simple: stop aiming to predict where stocks are going, and start building a process that stays profitable over 100 trades.

👉 Read this week’s Options 101 article to learn how probability-based thinking can transform your results and your longevity as a trader.

🧠 Mental Capital

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

Capital Preservation as Offensive Strategy

This week’s article explores one of the great paradoxes of trading: the fastest way to build wealth is to stop trying to build it quickly. True long-term success doesn’t come from swinging for home runs, it comes from staying in the game long enough for compounding to work.

Inside, you’ll learn why capital preservation isn’t defensive at all, it’s an offensive weapon. You’ll see:
✔️ The math of recovery, and why avoiding drawdowns accelerates compounding.
✔️ How a “boring” 20% annual return can crush an “exciting” volatile one over time.
✔️ The psychology of disciplined defense: trading with confidence because your risk is defined before entry.
✔️ How strategies like the Wheel and Poor Man’s Covered Calls use capital efficiency and sizing to protect against permanent loss.
✔️ Why position sizing, not prediction, determines survival, and how to implement it today.

Capital preservation isn’t about fear. It’s about playing offense by protecting your compounding machine, the only true edge that never fades.

👉 Read the full article at The Option Premium

📊 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.

This Week’s Implied Truth: Where the Real Edge Lives Right Now

Some markets drift, others grind, but this one still leans constructive. The big index ETFs, SPY, QQQ, DIA, VTI, RSP, continue to hold firm near highs with implied volatility running in the low teens and IV Rank mostly stuck in the single digits. That’s the options market telling us the same story as last week: complacent but not frothy. There’s modest edge in index premium, but no urgency. Breadth supports the message: roughly 60% of S&P 500 stocks sit above their 50-day moving average and 62% above the 200-day, an expansion that signals ongoing participation, not the narrow leadership we often see late in a move.

Short-term momentum, however, is starting to flash yellow. RSI(2) readings are stretched across the major indexes and many sectors (QQQ, SPY, SMH, XLF, XLB, XRT), and even some rate-sensitive areas like TLT and XLU sit below RSI(50) despite short-term bounces. That combination, long-term strength with short-term overextension, is classic late-stage trend behavior: not bearish, but less forgiving for oversized, short-premium trades in broad ETFs.

Under the surface, the interesting shifts are in this week’s relative strength profiles. Metals and miners remain a standout: GDX, GLD, SLV all show RSI(14) holding above 50, strong +DI readings, and some of the highest IV Ranks in the entire dataset. GDX sits at 54% IV Rank, GLD at 37%, and SLV at an impressive 71% with a 96% IV Percentile, the options market is still paying up for these tapes. Uranium (URA) stays in the high-IV cluster as well, though RSI momentum cooled into the mid-40s, a short-term pullback inside a still-elevated volatility regime.

Biotech (XBI), Materials (XLB), Homebuilders (XHB), and Retail (XRT) round out the “high-IV but trending” cohort. These sectors have firm ADX readings, strong +DI trends, and, importantly, high IV Rank relative to the rest of the market, where index IV remains deeply discounted. XBI sits at 22% IV Rank, XLB at 3% but solid trend strength, and XHB at 39% IV Rank despite low IV Percentile. These tapes offer more favorable premium conditions than broad indexes because traders continue to price in higher realized volatility.

On the other end of the spectrum, low-IV clusters remain firmly low. DIA, SPY, HYG, XLF, XLE, KRE, TLT, and XLU all carry near-zero IV Rank, reminding us that strong trends alone don’t create premium, volatility does. You’re simply not being compensated well enough for undefined risk in these names, especially with momentum extended.

The VIX itself remains stuck in a familiar split personality: the index sits around 15.9 with IV Rank near 19 but a 64% IV Percentile. Traders continue to sell short-dated volatility aggressively (RSI(2) remains oversold), yet they are simultaneously paying up for VIX options further out the curve. That tension often precedes short swings, not sustained moves.

The Simple Takeaway

We’re looking at a market that is:

• Long-term bullish

• Short-term stretched

• Thin on index premium

• Richer in selective high-IV pockets

This week’s setup favors:

• Smaller size and defined-risk spreads in the broad indexes (SPY, QQQ, DIA, VTI)

• More active short-premium ideas in metals, uranium, biotech, homebuilders, and materials

• Selective put-selling opportunities in laggards like TLT, XLU, and IBIT, which remain below RSI(50) but carry improving short-term strength

The discipline remains the same: go where the market pays you. Right now, that edge continues to sit in metals, miners, uranium, biotech, housing, and retail, while the indexes offer trend stability without premium juice.

If you trade with that framework, momentum context first, volatility conditions second, you stay aligned with what the tape is actually offering, not what you hope it will offer.

👉 For a deeper dive each week, including a full breakdown of the most liquid optionable ETFs and an in-depth analysis of 100+ highly liquid equities, check out The Implied Perspective, our paid service that turns this data into structured, high-probability premium ideas.

As always, this section is meant to be an educational lens on the current landscape, not personal advice. The edge comes from matching the strategy to the regime, keeping position sizes small, and letting a large sample of disciplined trades do the heavy lifting over time.

Quick Reference

📚 Educational Corner: Options Deep Dive

Most traders don’t blow up LEAPS positions because LEAPS “don’t work.” They blow them up because they pick contracts like lottery tickets, wrong strike, not enough time, too much extrinsic, and zero respect for volatility.

This week’s Educational Corner gives you a repeatable LEAPS selection framework built for real-world trading:

• Start with the underlying: only liquid names you’d still hold after a normal 20 to 30% drawdown.

• Use the right timeframe: 18 to 30 months so theta doesn’t turn into a silent tax as expiration approaches.

• Pick strikes like a pro: target 0.75 to 0.85 delta (deep ITM) so the contract behaves like stock and you’re paying mostly intrinsic value.

• Measure the “rental cost”: extrinsic value is what you’re paying to “rent” exposure, keep it reasonable or the whole idea of capital efficiency breaks.

• Respect volatility: don’t overpay for LEAPS when IV is elevated, and always size with the reality that LEAPS delta = stock exposure.

👉 If you want the exact checklist I use (delta targets, expiration window, extrinsic thresholds, and position-sizing guardrails), read the full issue, and then apply it to one ticker you’re watching this week before you place your next LEAPS trade.

⁉️ Did You Know?

The Best PMCC Hedge Isn’t a Put…It’s a Plan

Most traders hear “hedging” and picture buying puts like they’re paying an insurance bill. Sometimes that’s right. But the real truth is simpler, and more useful:

Your best hedge is having a defense you’ll actually follow before the market forces you to improvise.

Poor Man’s Covered Calls are capital-efficient for the same reason they can feel uncomfortable in a pullback: they’re naturally long delta. When the tape turns, the goal isn’t to eliminate drawdowns. It’s to make sure drawdowns don’t turn into bad decisions, panic rolls, oversized adjustments, or “fixing” the trade by adding more risk.

The pros hedge in layers:

• Small size so a bad week doesn’t become a career event.

• Cash on hand so you can respond instead of react.

• Simple, defined-risk overlays (index hedges, bear call spreads) so your portfolio isn’t hostage to one market regime.

The biggest mistake I see is waiting until the market is already sliding and then trying to invent protection. That’s not hedging. That’s negotiating.

Build the plan first, and hedging becomes boring, cheap, and repeatable.

👉 Want the full breakdown with practical examples? Read: “Eight Practical Ways to Hedge Your Poor Man’s Covered Calls.”

🔗 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

Educational use only. The Option Premium is a publication for educational purposes and does not provide personalized investment advice. Options involve risk and are not suitable for all investors. Always confirm details and manage risk prudently.