first things first | Outlier Insights
Welcome to Outlier Insights!
Each week I work hard to gather and curate information for your convenience. There are two main topics to the newsletter:
Market Analysis is where I share 15 high summary points for the market from the week prior.
Erik’s Brainstorming is where I share a couple ideas to watch each week along with my perspectives; often market related, sometimes not.
If what I do helps you out, please consider either subscribing on Substack or joining the Patreon to support my work and join the Outlier Community! You can also simply share the content, which is a big help as well.
Be an Outlier!
-Erik
Announcements
Outlier Community Updates:
Outlier Pros can check out the weekly schedule of events below, with streams set for Sunday (Market Prep), Tuesday (Market Internals), and Thursday (Skill Development). https://www.patreon.com/posts
The next Outlier Pro Plus Zoom workshop is 11Aug at 5pm PT! We’ll work through live market analysis then explore trade management decision trees for your strategies. https://www.patreon.com/OutlierTrading
Links.
Outlier Trading YouTube Channel - Daily livestreams & Weekly videos every Sunday.
FREE Outlier Community - Join like minded traders, education, & information.
Outlier Pro Patreon - Ready to transform your trading? Build for options traders of ANY skill level.
Latest videos!
1. Market Analysis.
** Early analysis, written 14Aug **
S&P 500 and Nasdaq both set new all-time highs this week, each gaining roughly 1.2%. The advance was fueled by large cap tech and rate cut hopes, with record closes despite mild profit-taking midweek.
Volatility stayed subdued, with the VIX closing near 14.5, down slightly for the week and over 20% YoY—reflecting a steady options environment even as PPI and CPI inflation data introduced brief whipsaws.
Gold surged past $3,400 on safe-haven flows, crude oil rallied on geopolitical tensions linked to the coming Trump-Putin summit, then faded on supply data, and Bitcoin hit a new all-time high over $123,800 before retracing to $118,400. All three remain elevated, with Bitcoin up more than 100% YoY.
Materials, Health Care, Consumer Discretionary, and Energy led sectors this week; Tech rotated lower after heavy Q2 profits. Ten of eleven S&P sectors were positive, with inflows concentrated in Telecom and Financial ETFs.
Intel climbed 7% after rumors of a possible US government stake, while Oracle and Amcor dropped on weak guidance. Tapestry sank 15% on tariff-driven cost pressures, despite EPS beats. Retail stocks steadied ahead of next week’s earnings.
July PPI jumped 0.9% MoM—the hottest in three years—while CPI moderated to 2.7% YoY, slowing Fed rate cut momentum but not derailing equity strength.
Jobless claims remain historically low, with labor market resilience cited by the Fed; however, payroll growth slowed, boosting odds for a September rate cut.
Fed rate cut odds surged above 90%, and options markets now price a strong chance of a 25bps move at the next meeting, with possible upside risk to 50bps.
US tariffs continue to bite, driving inflation in imported goods and broad profit warnings across industrials and retail. Washington debates persist over balancing inflation concerns and jobs softness.
Global focus is on the Trump-Putin Alaska summit, with implications for oil flows and Ukraine peace prospects. EM funds and China-linked ETFs saw big inflows on hopes for less aggressive US policy for the rest of 2025.
Financial and telecom sectors drew strong ETF inflows, while China and Canada’s financials led global fund rotation—contrasting with a pause in US inflows after an extended streak.
Consumer discretionary and homebuilders saw momentum, led by rate cut speculation and optimism around upcoming retail earnings. Mortgage-related names outperformed on better housing data.
Profit rotation into defensive sectors, especially health care and materials, suggests traders are hedging against potential macro shocks from inflation and rates.
Options activity stayed robust but unremarkable; put/call ratios remained normal and skew shallow, leaving tactical buyers with low outright vols but event-driven spread opportunities.
The whipsaw macro environment continues to reward nimble options strategies, with intraday volatility spikes around macro prints, sector rotation, and notable stock news shaping spreads and risk reversals for the week.
Looking to make serious progress as a trader without the BS? Join the Outlier community to accelerate your learning curve and develop your trading skillset. What members say:
““I’ve spent thousands on courses and alerts over the years, but nothing ever clicked like this. Erik rewired how I think. For the first time, I understand volatility, risk, and why trades work. I’m finally trading with confidence instead of guessing.”
-James K.
2. Erik’s Brainstorming.
I’ve been on a similar thread consistently for a few weeks now. Keeping your focus on what truly matters is challenging in trading. There are a lot of things going on and a tremendous amount of simultaneous learning. However, there still needs to be a specific focus on market effects and profit mechanisms.
If you’re anything like me, you started trading by figuring out what kind of analysis you like, what strategies looked interesting, and throwing stuff out there seeing what sticks. The goal of this post is to reframe this process for newer traders and offer a better route to creating a successful approach to trading options.
Options are a trading vehicle, nothing more. They by themselves offer precisely no edge. A common misconception by theta gangers is that theta is their edge, it absolutely is not. So what is?
This should be the very first step for every trader before you ever place their first trade - research what market effects you THINK you can profit from and quantify that it exists. Some very basic profit mechanisms:
Being good at determining direction and trading underlying movements
Finding market effects, like monthly bond rebalancing, and trading the coat tails of larger players
Identifying pivot points or areas of consolidation and trading a stock as it bases
Trading persistent market inefficiencies such as the general overpricing of volatility compared to realized volatility, variance risk premiums
There are literally an unlimited number of ideas a trader can explore. But before deciding if you want to buy a 0.50 delta call or the 0.52 delta call, first study the effect you’re attempting to profit from and get really good at identifying it. This doesn’t mean lazily looking at a few dozen charts and thinking “you got it”. It’s applying rigor to your research and quantifying it.
Once we’re confident in the effect we’re attempting to trade, we can then build an option strategy around it.
Like most of my profit mechanisms, they’re childishly basic in nature. For example, trading the IV collapse post earnings releases. Before figuring out if I wanted to trade straddles or strangles, short DTE or longer DTE, I first need to understand the behavior of the effect.
The main point is very clearly identifying the very specific market effect you are trying to trade. By taking the time to clearly define this, it makes it much easier to reason through how to best capture it.
Good luck out there.
Be an Outlier
Erik
DISCLAIMER:
The content presented is for informational purposes only and any opinions, news, research, analyses, or other information contained are provided as general market commentary and do not constitute investment advice. Outlier Trading, its affiliates, and employees are not responsible for any investment decisions made based on the information presented. We do not guarantee the accuracy, completeness, or reliability of any information presented and are not liable for any losses or damages arising from the use of or reliance on this information. By accessing this content, you acknowledge and agree to these disclosures and terms of use.