Before We Get Started…

Before we get into this week’s issue, I want to be direct.

If you’ve been reading The Option Premium for a while and you’ve found it genuinely useful, I’d appreciate your support by upgrading before we head into 2026.

I’m expanding the business next year, more live webinars, structured courses, more videos, new portfolios, and deeper educational content. That buildout costs real time and real resources, and pricing will be going up in 2026. I’m telling you now because I respect your intelligence and I don’t do gimmicks.

Here’s what pricing is today:

• The Income Foundation: $9/month: cash-secured puts + covered calls (Wheel), with a real model portfolio and weekly guidance. In January I’m adding a weekly watchlist for members who want more opportunities beyond the trades we place.

• Wealth Without Shares: $49/month: capital-efficient stock replacement strategies that have produced well above 65% returns since launch, using far less capital than owning shares. It’s our fastest-growing service and we’re expanding to five, fully-diversified, portfolio approaches, two “lazy,” two active, and one in-between, so you can keep it simple or build real diversification.

• The Implied Perspective: $129/month: high-probability, risk-defined credit spreads and related structures around short-to-intermediate-term extremes, plus hedges designed to complement the other portfolios.

• Total Access: $149/month: all three services (Income Foundation + Wealth Without Shares + Implied Perspective).

I designed The Option Premium so the services can work in unison, income, capital efficiency, and risk-defined spreads/hedges, because that’s a sturdier way to trade. But you don’t need all of it. If one strategy fits how you think and what you trade, that’s a perfectly smart decision.

The only promise I’ll make here is simple: if you join before the 2026 price change, you keep your current price for as long as your subscription stays active. No fine print. No “limited time” theatrics. Just a commitment to the people who supported this early.

If you’re ready to stop piecing together fragments from random sources and follow a clear, professional process that’s built to be repeatable, I’d be glad to have you with us.

Thanks for reading, and for helping me build something that’s meant to last.

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📰 Market Commentary & Snapshot

This past week reminded us why professional traders distinguish between noise and signal, and why that distinction matters more than ever when volatility is compressed and everyone's crowded into the same narrative.

The setup looked ugly early. Monday through Wednesday delivered four consecutive losing sessions for the S&P 500 as markets digested delayed jobs data, watched Oracle drop 5.4% on financing concerns for a major data center project, and questioned whether the AI infrastructure buildout would ever justify its price tag. Broadcom had already shed nearly 20% in December. The Nasdaq lost 1.81% on Wednesday alone. The rotation out of mega-cap tech wasn't orderly, it felt capitulatory.

Then Thursday's inflation data arrived, and the entire narrative flipped. November's CPI printed at 2.7% versus expectations of 3.1%. Core CPI came in at 2.6% instead of 3.0%, the slowest pace since early 2021. The S&P 500 jumped 0.79%. The Nasdaq surged 1.38%. Treasury yields tumbled as the market repriced the Fed's ability to ease in 2026. Chipmaker Micron reported guidance of $18.7 billion in revenue against expectations of $14.2 billion, erasing weeks of skepticism about AI spending in a single earnings call. Friday's triple-witching expiration extended the rally, with Oracle adding another 6.5% on news of the TikTok deal.

By Friday's close, the week's lesson had crystallized: markets don't move in straight lines, and the story you're told on Monday rarely survives to Friday unchanged.

The Scoreboard:

• S&P 500: Closed at 6,834.50, essentially flat for the week after Thursday's recovery erased four days of losses. More importantly, the index reclaimed its 50-day moving average around 6,765, a technical level that had acted as support throughout the fall rally.

• Nasdaq: Finished around 617, down 0.8% for the week despite Friday's 1.3% gain. The month-to-date damage remains real, Oracle and Broadcom are still nursing double-digit December losses, but the panic has subsided.

• Dow: Up roughly 1% for the week, supported by industrials and financials that benefit from stable economic conditions without needing the Fed to ride to the rescue. Nike's 10% Friday plunge on weak China revenue and tariff-pressured margins couldn't derail the broader gain.

• Russell 2000: Small caps held above 2,500 after hitting record highs the prior week, finishing with modest gains as expectations for 2026 rate cuts improved. The small-cap story remains intact, just less linear than the headlines suggest.

What Changed, and What Didn't:

Volatility collapsed. The VIX finished around 14.9, down sharply from Wednesday's spike to 17 and back to levels that would have seemed impossibly low in any prior market cycle. For context, this is lower than mid-2021, lower than early 2020 pre-COVID, lower than most of the past decade outside brief windows of peak complacency.

Treasury yields moved decisively. The 10-year dropped from 4.19% early in the week to 4.14% by Friday. The 2-year fell even more, to 3.46%, as the market absorbed the implications: softer inflation gives the Fed room to ease further if labor market weakness continues. Futures markets now price in 46% odds of a March rate cut and 35% for July, up meaningfully from a week ago when January cuts were essentially off the table.

The jobs data told two stories simultaneously. November payrolls grew 64,000, beating the 45,000 forecast and suggesting hiring hasn't collapsed. But October was revised to show a loss of 105,000 jobs, unemployment ticked to 4.6% (the highest since mid-2021), and wage growth slowed to 3.5% year-over-year, the smallest annual gain since May 2021. The picture isn't recessionary, but it's cooling exactly as the Fed hoped. That gives them options.

What It Means for Income Traders

The week clarified three things that matter more than the headline index moves:

First, the AI trade isn't dying, it's being forced to prove itself.

Oracle and Broadcom got hammered on concerns about debt levels and sustainability, then Oracle rallied 6.5% when it closed the TikTok deal. Micron surged 10% on earnings that showed actual demand, not just promises. The market is drawing a line: show me profitability, not just a compelling story about the future.

For those running the Wheel or selling cash-secured puts, this is a warning sign disguised as opportunity. That name down 15 to 20% in a month with fat premiums isn't necessarily a bargain, it might be a business model being repriced in real time. A 3% weekly premium on a stock in structural decline isn't income, it's speculation with a time limit. Focus on companies with demonstrable cash flows, reasonable valuations, and options markets liquid enough that you're not sacrificing edge to market makers on the spread.

For PMCC traders, Micron's performance proves that quality technology names with actual earnings and pricing power can still work. But the days of buying LEAPS in unprofitable infrastructure plays because "AI is the future" are over. Stick to businesses you'd be comfortable owning outright if you got assigned, not themes you're betting will eventually work out.

Second, a VIX at 15 means the edge comes from process, not from picking direction.

With realized volatility running below implied, you're being compensated to sell premium that's slightly overpriced relative to how much markets are actually moving. That's the definition of edge, but only if you're sizing positions to survive consecutive losses and managing trades mechanically.

Wednesday's 1.81% Nasdaq drop followed immediately by Thursday's 1.38% rally is exactly the kind of environment that punishes naked short options but rewards well-structured credit spreads and iron condors. The moves are large enough to hurt if you're wrong, but predictable enough in magnitude that defined-risk strategies capture most of the premium without the tail risk.

For index-based income, this means continuing to favor spreads over naked exposure, especially in the final week of the year when volume thins and moves become less predictable. For stock-based Wheel trades, it means being selective about strike selection and refusing to force trades just to deploy capital. A 2% premium on a quality name at a strike with clear support beats a 5% premium on speculative junk every single time.

Third, softer inflation and mixed jobs data mean the Fed has room to cut, and that changes the 2026 setup.

The combination of CPI at 2.7%, rising unemployment at 4.6%, and wage growth slowing to 3.5% gives the Fed significant flexibility. The bond market understood this immediately: the 10-year yield at 4.14% and 2-year at 3.46% reflect expectations for continued easing, even if January is now off the table.

This matters because it validates the rotation that's been building for months. Lower short-term rates help small caps, regional banks, and rate-sensitive sectors that have lagged for years. But, and this is critical, longer-term rates above 4% mean that fundamentals still matter. Discounted cash flows don't disappear just because the Fed cuts another 50 basis points in 2026. Companies with weak balance sheets don't become attractive because policy is slightly easier; they become attractive when their underlying business improves.

The practical implication: diversify across strategies, not just across tickers. Run PMCCs for long delta exposure in quality names with sustainable competitive advantages. Use the Wheel for measured income in stable businesses with clear support levels. Deploy credit spreads and iron condors for non-directional premium when the setup favors selling volatility over predicting direction. That way, no single market theme, rate cuts, AI resurgence, small-cap rotation, dominates your entire risk profile.

📊 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 16th - The Drunk Gambler Who Taught Me Everything About Options Trading

🗓️ Thursday, December 18th - Apple LEAPS Strategy Review: 92% Return Using Poor Man's Covered

🎓 Options 101: The First Steps to Trading

Options 101: Implied Volatility, IV Rank/Percentile, and Expected Move

Most traders look at an options chain and instinctively ask: Where will the stock go? This week’s Options 101 flips the question to the one pros actually trade: What is the market pricing…and am I getting paid enough to take the other side?

Implied Volatility (IV) is the “weather forecast” inside every options chain. It doesn’t predict direction, it prices uncertainty. When IV rises, premiums expand because the market is charging more for potential movement. When IV falls, premiums get cheaper because the market expects calmer conditions.

But IV by itself is useless without context. That’s where IV Rank (IVR) and IV Percentile (IVP) come in. They tell you whether volatility is high or low relative to that stock’s own history, which helps you decide when selling premium is worth it, and when you’re just taking risk for thin pay.

Then we tie it all together with Expected Move, the market-implied range for where price is “priced to travel” by expiration. It turns volatility from an abstract concept into a practical framework for strike selection, realistic expectations, and risk management, especially when combined with delta as a probability cross-check.

If you sell premium, this is how you stop guessing and start structuring trades around what the market is actually pricing. If you buy options, it’s your built-in warning system against overpaying.

👉 Read the full article here → Implied Volatility, IV Rank/Percentile, and Expected Move

🧠 Mental Capital

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

How Quants Manage Risk (And What Premium Sellers Can Learn)

This week’s article pulls back the curtain on how quantitative traders actually survive, and thrive, through market regimes that wipe out most discretionary traders. The difference isn’t prediction or conviction. It’s measurement.

Instead of asking, “How much can I lose on this trade?” quants ask deeper, more useful questions: How does my risk change as price moves? What happens if volatility spikes? How exposed is my entire portfolio if correlations tighten?

Inside this piece, you’ll learn:

• Why risk should be viewed as a distribution, not a single dollar amount

• How concepts like Value at Risk (VaR) and Expected Shortfall translate directly to premium selling

• Why portfolio heat and correlation matter more than any single trade

• How tracking portfolio-level Greeks (not just per-position Greeks) changes everything

• Why position sizing, not strike selection, is the true driver of long-term performance

• How quants stress test portfolios before markets move, not after

• The mechanical adjustment rules that remove emotion from decision-making

The takeaway is simple but powerful: You don’t need a hedge fund or advanced math to trade like a quant. You need a framework that measures risk honestly, sizes positions dynamically, and adjusts mechanically.

👉 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.

The Broad Picture - Calm Indexes, Wild Pockets, and a Few "Don't Be a Hero" Signals

The broad tape looks healthy. SPY, QQQ, DIA, and VTI all hold RSI(14) above 50, trend intact. Implied volatility stays subdued: SPY 12.4%, DIA 11.4%, VTI 12.7%. That's a friendly backdrop for premium sellers, except for one problem.

Short-term momentum is elevated. RSI(2) reads 73.7 in SPY, 78.4 in QQQ, 78.1 in VTI. The market can remain bullish and still punish aggressive short puts sold too close to price. The edge this week isn't "sell everything." It's sell smaller, sell farther, keep risk defined. You're not being paid much for being wrong.

Where the Premium Actually Pays You

This week splits into two markets:

Metals and miners offer premium, but they're stretched. 

• SLV shows IV Rank 83%, IV Percentile 97%, RSI(14) 74.8, ADX screaming trend at 50/38.

• GDX posts IV Rank 52%, IV Percentile 82%, RSI(2) at 94, not strong, just hot.

• GLD delivers IV Rank 36%, IV Percentile 72%, RSI(5) 84.9, RSI(14) 71.1, strong ADX 41.6/26.8.

• XLB (Materials) shows IV Percentile 95%, RSI(2) 90, RSI(14) 62.9.

Better Posture:

• Neutral structures over directional bets (iron condors, wide strangles)

• If selling puts: farther OTM + smaller size

• Take profits quickly

• Consider call-side defined-risk (traders chase these moves late)

The options market is paying you here. The tape says these moves are crowded and extended. Sell puts now and you're betting against mean reversion. That works until it doesn't.

Better posture: neutral structures over directional bravado, iron condors, wide strangles where appropriate. If selling puts, go farther out-of-the-money with smaller size. Take profits quickly. In this kind of stretch, call-side defined-risk quietly becomes the higher-probability sale. Traders chase these moves late.

The "high IV + weak RSI" bucket offers real setups. The market pays you here because it's uncomfortable, not because it's trending smoothly.

XLU (Utilities): IV Rank 100%, IV Percentile 100%, RSI(14) 38.0, ADX elevated at 31.9/24.5.

TLT: IV Rank ~1%, but RSI(14) 39.1 with solid ADX 29.5/23.9.

XHB (Homebuilders): IV Rank 39.5%, RSI(2) 19.3, RSI(14) 45.5. HYG: RSI(2) 21.2, RSI(14) 44.2. High ADX plus RSI(14) below 50 often signals clean downtrend. Selling puts aggressively becomes a "catch the falling knife" hobby.

Better posture: defined-risk put spreads beat naked puts. Wait for confirmation, even simple signals like RSI(5) turning up from depressed levels, before scaling. Treat these as slow-building positions, not one-and-done premium grabs.

Financials are strong, but the premium isn't. XLF: RSI(14) 64.6, strong trend with ADX 37/25.6, IV Rank 3%. KRE (Regionals): RSI(14) 69.3, monster ADX 57/37.5, IV Rank 3%. Great trends, mediocre pay. These are covered call environments, not fat premium environments.

Energy is weak and not paying enough. XLE and XOP both show RSI(14) at 43, ADX strong above 30, likely persistent downtrend behavior. Premium isn't terrible (USO IV Rank 18.6%, XOP 8%), but it's not the kind of cushion that forgives bad strike selection.

Bitcoin proxy shows bounce plus high IV, momentum still below 50. IBIT: IV Rank 43.7%, IV 45.6%, RSI(2) 71.7 (sharp bounce), RSI(14) 43.6. Classic snapback inside a weaker intermediate regime. The market gives you juice but can whip you around.

VIX: volatility crushed, not gone. VIX at 14.9, RSI(2) 13.4 (extremely oversold), RSI(14) 41.4. When VIX gets this compressed, it doesn't predict a crash. It raises the odds of a volatility pop. Short premium trades in low-IV indexes feel fine right up until they don't.

The Setup

We're looking at a market that is trend-stable in indexes (RSI(14) above 50 across SPY/QQQ/DIA/VTI), short-term stretched in the majors (RSI(2) elevated), premium-rich in metals and miners (but extended and crowded), premium-rich in select weak/defensive pockets (XLU, some rates/housing signals) that require defined-risk and patience, and VIX-compressed, which argues for humility on sizing.

In the broad indexes: smaller size, defined-risk spreads, farther strikes. Faster profit-taking. This is not the week to be stubborn for every last dime.

In the premium pockets (SLV/GDX/GLD/XLB/URA): don't confuse high IV with safe when RSI is this extended. Prefer neutral structures or very conservative put-selling, wide, small, disciplined.

In the mean-reversion candidates (XLU/XHB/TLT/HYG): defined-risk put spreads over naked exposure. Scale in only when the tape stops falling. Even slight momentum improvement helps.

👉 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

The article breaks the strategy down into the three numbers that actually matter: net debit, basis reduction, and yield on deployed capital. You’ll see why short-call premium isn’t just “income,” but a systematic way to lower your effective LEAPS cost over time, and why measuring returns against capital actually at risk is the only honest way to evaluate performance. It also tackles the uncomfortable truths most promotions skip: income isn’t smooth, upside is capped, and annualized yields are often fantasy if you ignore rolls, volatility shifts, and bad months.

The takeaway is simple but powerful: PMCCs work best when you treat them like a business, track basis reduction cycle by cycle, and set expectations that survive real markets, not ideal ones.

👉 If you want the full framework, including clean tracking methods, realistic yield ranges, and rules for when the math breaks down, read the complete article and start managing your LEAPS income like a professional, not a promoter.

⁉️ Did You Know?

Getting assigned on a PMCC short call doesn’t mean your LEAPS gets “called away.”

When a short call in a Poor Man’s Covered Call is exercised, your broker doesn’t touch your LEAPS at all. Instead, you wake up with a short stock position, an obligation to deliver shares you never owned in the first place. And here’s the part that surprises most traders: you usually should not exercise your LEAPS.

In most cases, the cleanest and most economical move is simply to buy back the short shares in the market and keep your LEAPS intact, preserving its remaining time value and allowing you to sell another short call right away. Exercising the LEAPS often destroys valuable extrinsic value and leaves money on the table.

Assignment isn’t a disaster. It’s just plumbing. Traders who monitor extrinsic value, respect ex-dividend dates, and roll early rarely face it, and when they do, they know exactly what to do next.

👉 Want the full breakdown with practical examples? Read: What Really Happens When Your PMCC Gets Assigned? (The Answer Might Surprise You)

🔗 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.