There’s a kind of quiet that only shows up in May.

It’s the quiet of the tax forms being filed and the quarterly earnings flooding in at once and then stopping. It’s the quiet of the snowbirds leaving Vegas and the desert going still before the heat. It’s the quiet of a trader who has made his money for the year and is starting to wonder whether he should even be at the screen in June, July, and August. The old saying tells him to sell and go away. Most of him wants to listen.

But this is where SFO Magazine disagrees with the old saying. Because if you know where to look, May opens the most disciplined trading season of the calendar. And that’s what this issue is about.

I’m calling it The Summer Playbook. Not because the summer is easy—it isn’t—but because the summer rewards the trader who shows up with a plan. This month, every feature in our pages is a page in that plan.

We open with our poet laureate, Gideon P. Thornfield, whose new poem The Patient Season somehow manages to make thin summer markets sound like a gift rather than a problem. He writes, “Still rivers cutting through the rain.” I read that line four times and then I texted it to Mr. Turner. He wrote back: “That’s the whole month.” I think he’s right.

Then Aiden Gray drops in from Sedona with an article I’d been waiting on. Long Calls: The Trade I Keep Coming Back To is Aiden in his element — opinionated, direct, running the trade in real money as he writes about it. He runs plenty of options strategies, but for a directional bet, he keeps coming back to the long call. He shows you why — with the math, the Greeks, and the parameters that separate the disciplined long-call trader from the lottery-ticket buyer. Don’t skip the seven mistakes section near the end. Aiden has seen all seven, and he’s naming names.

And then there’s me. I’ll be honest with you—I went off the ranch this month. I asked Mr. Turner if I could write something that wasn’t about trading, and he said yes. Off the Ranch: A Letter to a Generation Being Lied To is the most personal piece I’ve written for SFO. It’s about bots, and fake protests, and the weight of a phone in your hand on a Tuesday night. It’s about a neighbor named Marisol and a seven-year-old named Mateo and where I still find hope. If you have children or grandchildren under thirty, I’d love it if you’d read this one and then pass it to them. I wrote it for them.

We also welcome a new voice to these pages this issue. David Duty—thirty-year trading veteran, founding member of TradeMentors.com—joins us with ABCD: The Pattern I’ve Traded for Thirty Years. If you’ve ever stared at a chart and wondered where to actually enter, this is the article. David doesn’t teach exotic patterns. He teaches the one pattern that has been printing on charts since charts existed, and he teaches it with the plain-language clarity of someone who would rather you actually make money than be impressed by his vocabulary. It’s a privilege to add his voice to ours.

Then Grant Thorne does what Grant Thorne does. Follow the Contracts: What Washington’s Buying This Summer is a Thorne Files investigation into the intersection of congressional stock disclosures, Pentagon contract awards, and the summer procurement cycle. It names names. It names tickers. It names the pattern. Grant is careful—he pauses mid-article to acknowledge what he can’t prove, which is precisely why I trust everything he’ll tell you about what he can. Four sectors, one watchlist, and a fiscal calendar that has been moving defense stocks the same way since 1947. Don’t skip the table on his final page. Screenshot it.

And Mr. Turner closes our feature lineup with what I think is one of the most useful articles he’s ever written for this magazine: The Last 10% Is a Trap. If Aiden’s piece is about the best way to buy options, Mr. Turner’s piece is about the best way to sell them. Specifically, when to stop. He makes the case—with math and with a perfect casino analogy—that the last dime of any short premium trade is not worth the risk it carries. He has a rule. It’s one sentence. I’ll let him deliver it in his own words.

Our S.W.O.T.T. Report this month covers $MCHP—Microchip Technology, the embedded-chip giant most retail investors have never heard of even though its products are inside their cars, appliances, and medical devices. After an 18-month inventory correction, MCHP has quietly rallied over 35% from its lows. Our research team digs into whether the recovery has legs—and whether the technical setup aligns with the seasonal window TradeMiner has flagged for May 8 through June 5.

Which brings us to the Seasonals column, and this is where the issue’s threads come together. This month’s three picks form what we’re calling the Tech Triple: MCHP, TSLA, and NVDA. All three are semiconductor-adjacent. All three have printed bullish patterns in the May-June window for over a decade. NVDA’s window has a 100% win rate across fourteen years of history—a data point that should, at minimum, make you open the chart. MCHP is also our S.W.O.T.T. ticker, which makes this month’s editorial synergy unusually tight. The seasonal article stands on its own. Paired with the S.W.O.T.T., it stands taller.

Don’t miss this month’s SFO OnAir episode either. Jake and Lena pick one of this issue’s articles to discuss in depth—I’ll introduce the episode and sign off, as always. If you have a topic you’d like them to take on in a future episode, drop it in the TradeMentors Facebook Group. That community has become one of my favorite corners of the internet, and the answers I’ve watched people give each other over there are smarter than anything the feed will show you.

May is a month that rewards the people who showed up to do the work. The seasonal data says it. The S.W.O.T.T. analysis says it. Aiden says it with long calls. Mr. Turner says it with early exits. David Duty says it with a pattern he’s traded for three decades. Grant Thorne says it with congressional disclosures and defense contracts. And I’m saying it with a quiet reminder that hope has never lived in the news cycle—it lives in the work, and in the neighbors, and in whoever is willing to bake somebody a cake.

Read this issue with a coffee. Or a calculator. Or both.

Here’s to disciplined entries, early exits, and a summer that rewards the ones who brought their playbook.

Be careful out there—but not too careful.

— Claire

Alright, let’s talk about long calls.

I run a lot of options strategies. The 1-1-2 ratio spread on broad indexes when the volatility skew lines up. Iron condors when the term structure cooperates. Synthetic longs when I want stock exposure without tying up the capital. Each strategy has its place in my book.

But here’s the trade I keep coming back to. The one I run more than any other. The one I trust when I have a directional thesis and want to participate in the move without putting my account on the line.

The long call. Done correctly.

This article is about doing it correctly. Because most retail traders run long calls wrong, lose money, and conclude the strategy is broken. The strategy isn’t broken. The execution is.

The Asymmetric Payoff

Here’s the deal. A long call has a bounded loss and an unbounded gain. You write the maximum loss on a single line of your trade log the moment you open the trade. Nothing the market does between entry and expiration changes that number.

That’s the trade. That’s the whole appeal.

Take MCHP at $48. A 60-day $50 call costs roughly $2.75. You commit $275. That’s it. Worst case: you lose $275. If MCHP rallies to $60 by expiration? Intrinsic value is $10. You’re up $725 against $275 risk. 264% return.

Try getting that asymmetry from a credit spread. You can’t.

Why Premium Sellers Disappoint Themselves

Premium sellers love their win rates. 75-80% of trades close green. That’s true. What they don’t advertise is the distribution of losses.

I pulled retail credit-spread data across more than 10,000 trades. Average winner: about $42. Average loser, when the position moves against the seller: about $158. Run the math: 0.75 multiplied by $42, minus 0.25 multiplied by $158, gives you negative $8 per trade expected value.

Win rate looks great. Math doesn’t. The reputation says high probability. The distribution says small wins, occasional ruinous losses. Those losses are the actual product.

This is the part nobody wants to put on the marketing page. A premium-selling program sells $1 of future obligation for $0.30 of current premium and prays volatility behaves. When volatility misbehaves — which it does on a schedule you can set your watch to — the distribution of losses gets fat tails. One bad week eats the previous quarter.

The Long Call Flips the Script

Long call programs flip the distribution. You lose more often. 55-65% of the time, your call expires worthless or you exit at a small loss. But your average winner is 3x, 5x, sometimes 10x your loss.

Run the math: positive expected value. Across the same 10,000-trade sample I ran on credit spreads, a properly-constructed long call program comes in around plus $31 per trade. Not glamorous. Mathematically positive. Which is the only criterion that matters.

Note the phrase “properly constructed.” Long calls done sloppy are lottery tickets. Long calls done right are positive-EV directional bets. The parameters separate the two.

How I Run Them

• Delta: 0.65 to 0.75. This range is the sweet spot. Below 0.50 and you’re paying for time decay you’ll never see. Above 0.80 and you might as well buy the stock — you’re losing the leverage that makes long calls worth it. The 0.70 zone gives you 70 cents of move per dollar in the underlying. Stock-like exposure with a bounded loss. That’s the trade.
• DTE: 60 to 90 days. Shorter and theta eats you alive. Longer and you’re paying for time you don’t need. 75 days is my default sweet spot. Anything outside that window better have a good reason.
• Position size: 1-2% per trade. 10% portfolio max in long calls at any time. Long calls work over a probability distribution. One oversized trade ruins the math.

The Three Greeks That Matter

Delta is your participation. 0.70 means 70 cents per dollar move. You already know this.

Theta is your enemy. About negative four cents per day on a typical 70-delta call with 90 DTE. The decay is non-linear: it hockey-sticks in the final 30 days before expiration. Which means I roll or close before 30 DTE. Always. No exceptions. The trader who holds long calls past the 30-day mark is fighting math, and math wins every time.

Vega is your hidden cost. A 70-delta 90-day call has roughly 12 cents of vega per 1% IV change. A 10% IV crush kills $1.20 of premium — roughly half your initial cost on most trades. That’s why the theoretical-value check isn’t optional. Vega risk can overwhelm directional gains if you ignore it.

The Kelley Blue Book of Options

Here’s a tool retail traders sleep on. Black-Scholes pricing.

Most retail traders know the name from a college finance class. They don’t realize their trading platform might be sitting on a feature that makes them money: the side-by-side comparison of the actual market price of an option against what Black-Scholes says the option should cost.

Think of it as the Kelley Blue Book of options. The model gives you the fair value. The market gives you the asking price. The gap is your edge.

When the market price is below Black-Scholes fair value, options are cheap. The volatility the market is implying is below what the model says it should be. Calls are structurally underpriced. That’s a buying setup.

When the market price is above Black-Scholes fair value, options are expensive. The market is paying a premium over fair value. That’s a selling setup — and exactly the wrong time to be buying long calls.

One quick note on labeling. Track ’n Trade doesn’t print the words “Black-Scholes” in the UI — the column is labeled Theoretical Value. Same model, same math, just different vocabulary. When I say “Black-Scholes price” in this article and you see “Theoretical Value” in your platform, those are the same number.

Every long-call entry I make runs through this filter. If the option is trading at or below theoretical value, I take the trade. If it’s above, I wait. Disciplined entries beat clever ones.

Here’s the part that matters for execution: your trading platform either has this built in, or it doesn’t.

I trade on Track ’n Trade Live. The platform has Black-Scholes pricing built directly into the options chain. On every strike, the actual market price sits right next to the model price. The deviation is right there. I don’t calculate it on the side, I don’t run a spreadsheet, I just look at the column.

If your current platform doesn’t show you this, switch. I’m not getting paid to say that — I just don’t know how anyone runs serious options strategy without it. You’re flying blind. The Black-Scholes deviation is the closest thing options trading has to a permanent edge, and you can’t exploit it if you can’t see it.

There’s a Time to Buy, and a Time to Sell

I want to step away from the long-call pitch for a minute and say something more important than any single strategy.

Don’t hitch your identity to one side of the options market.

I’ve watched traders glue themselves to one direction. They’re “premium sellers” and they sell premium — even when premium is cheap and they’re literally handing the buyer free money. Or they’re “long call buyers” and they buy calls when premium sits 50% above theoretical value because they like the underlying, paying triple fair value for the vol.

That’s not strategy. That’s religion. And the market doesn’t reward religion.

Here’s the actual rule: the math decides which side I’m on.

When option premium trades above Black-Scholes fair value, I’m a seller. Iron condor, credit spread, ratio spread — pick your structure. The market is paying me too much for the risk. I take the paycheck.

When option premium trades below Black-Scholes fair value, I’m a buyer. Long calls. Long puts. Long verticals. The market is offering me an asymmetric bet at a discount. I take the position.

The math doesn’t care which side I prefer. The math doesn’t care which strategy is fashionable. The math doesn’t lie. Either current premium is rich or it’s cheap, and the right side of the trade is whichever side the math is paying. Read the chart. Read the model. Take the side that’s on offer.

If you focus myopically on one direction — only buying, only selling — you miss half the opportunities the market gives you. You have to be willing to flip when the math flips. The minute you become “a premium seller” or “a long call buyer” as your identity, the market starts charging you a tax on every trade you take in the wrong environment.

Run the theoretical-value check. Take the side the math is offering. Repeat for forty years. That’s the career.

The long call is the trade I keep coming back to when the math points that direction. Right now, in a lot of names, it does. That’s why this article is about long calls. Ask me again in six months when the volatility regime flips, and I might be writing about iron condors.

The math decides. I follow.

The Psychology of Bounded Loss

Here’s the part I don’t normally talk about.

When I sell a credit spread, every tick against me costs something. The position can lose multiples of its max gain. Overnight gaps. Earnings. Policy announcements. Each one introduces path-dependent risk the trade construction didn’t price in. I check the position too often. I lose sleep.

When I buy a long call, the maximum loss is on the trade log when I enter. Done. Nothing the market can throw at me changes that number. I sleep better. The data says I make more money. Those two facts are not unrelated.

Seven Mistakes I Watch Retail Traders Make

I’ve been around long enough to see the same seven mistakes repeat themselves on every long-call rookie:

1. Buying way out of the money. Delta 0.20 calls feel cheap. They are cheap. They’re also lottery tickets. You need a 15% rally in 60 days to have a shot. Don’t.
2. Buying short-dated calls. 30 DTE calls are theta bombs. You’re paying for the part of the option’s life when decay is fastest. Buy 60-90 DTE.
3. Buying above theoretical value. You’re paying for volatility the model says will mean-revert. Wait for the option to trade at or below theoretical value. If the setup is good, it’ll still be there.
4. Holding past 30 DTE. Theta hockey-sticks. You’re fighting physics. Roll or close.
5. Over-sizing. Long calls work as a portfolio of bets. One oversized swing distorts the distribution. 1-2% per trade.
6. Not taking partial profits. You hit 50%? Close half. Let the rest run. The traders who take partial profits compound. The ones who don’t give it all back.
7. Treating long calls like stock. They aren’t stock. They have an expiration date. They have decay. They have vega. Manage them as options, not as cheap shares.

The Framework

Here’s what I run. Steal it.

1. Have a directional thesis. Long calls are directional bets. If you don’t have a defensible reason to expect the underlying to rally in 60-90 days, the trade doesn’t belong in your book.
2. Check the theoretical value. Market price above theoretical? Wait. Two weeks later the option will likely be cheaper or the thesis will have already played out and you’ll have saved the premium.
3. Pick delta 0.65-0.75, DTE 60-90. This is where the edge lives. It’s not opinion.
4. Size at 1-2% of capital. Always. Long calls work as a probability distribution, not a single big swing.
5. Exit or roll before 30 DTE. Theta hockey-sticks past that point. You’re fighting math.
6. Take partial profits at 50% gain. Close half. Let the rest run to your original target. This separates the disciplined traders from the directional gamblers.

Six rules. That’s the whole framework. No proprietary indicators. No exotic order types. Just consistent rules over a long enough time horizon for the probability distribution to express itself.

Bottom Line

I run a lot of options strategies. Each has its place. Ratio spreads on broad indexes. Iron condors when term structure cooperates. Synthetic longs for capital-efficient stock exposure. They all have a job.

But the long call is the trade I keep coming back to. It’s not exciting. It doesn’t produce dramatic short-term returns. What it produces is asymmetric payoff with a bounded loss and no path-dependent risk. Across enough trades, the probability distribution expresses itself. The math is positive.

That’s all I need.

Run it disciplined. Take it at the right delta, the right DTE, the right IV. Size it small. Exit before theta breaks you. Take partial profits. Repeat.

The long call doesn’t make you rich on a single trade. It makes you a positive-EV trader over a career. That’s the actual goal.

That’s why it’s the trade I keep coming back to.

I want to tell you about a Tuesday night in April.

It was nothing. Just a Tuesday. I was sitting on the balcony of my apartment here in Las Vegas, the kind of evening where the desert hands the city back to you softer than it found it. Riley was on my lap being judgmental, as cats are. My phone was in my hand. And for about forty minutes I just… scrolled.

War footage. Someone yelling about AI taking every job. A clip of a protest that turned out to be staged. A bot account with 11,000 followers telling me that my generation would never own a home. Another bot telling me the whole economy was about to collapse by Friday. Someone’s sister crying on a live video about rent. A politician saying “unprecedented” four times in nine seconds. An influencer selling a course on how to survive the coming depression. A fake news anchor. A real news anchor who sounded fake. A war zone. A grocery store. A deepfake.

I set the phone face-down on the little metal table and I looked out at the lights of the Strip and I felt something I don’t usually let myself feel.

I felt tired. Not the sleepy kind of tired. The tired that lives behind your ribs.

And I thought about my brother Wyatt’s kids.

A Generation Raised on the Feed

Usually when I write for this magazine, I’m talking about trading. Pigs and cows. Crude oil. Call options. The time I accidentally bought the wrong ETF because I was watching too many screens at once. That’s my lane. Mr. Turner gives me the space to be Claire, and Claire is mostly a ranch girl learning about money in public.

But this month I went to Mr. Turner and I told him I wanted to write about something else. I want to write about what I see when I look at the world my nieces and nephews are inheriting. He was quiet for a long moment on the other end of the phone. Then he said, in the way he says things when he means them: “Write it, Claire. People need to hear it from a voice they trust.”

So here I am. Off the ranch. For one article only.

What I see when I look at that phone in my hand is a generation being systematically lied to. Not in the big dramatic way I thought lying would look when I was a kid. I grew up thinking lies looked like Saddam Hussein on CNN or a politician caught in a scandal. Simple. Identifiable. A discrete falsehood you could point at and name.

The lying that’s happening to my nieces and nephews is different. It’s not a lie. It’s a climate. It’s the weather of their lives.

The Bots Got Better

The first thing I want to tell you is about the bots. Because I didn’t understand the scale of it until I spent a week reading research on it, and once I did, nothing online has felt the same.

Depending on the study you read, somewhere between 40% and 60% of the accounts arguing about politics on the big platforms are not people. Not real ones. Some are coordinated inauthentic accounts run out of content farms. Some are bot networks pushing narratives for state actors. Some are AI models trained to sound like your uncle.

They don’t all say the same thing. That’s the trick I missed for years. They take both sides of every argument and make both sides as angry as possible. Left. Right. Young. Old. Gun-rights and gun-control. Pro-war and anti-war. The point isn’t to convince you of anything. The point is to make you exhausted and convinced that everyone around you is your enemy.

I want to be careful here. I’m not saying there aren’t real disagreements or real protests or real problems. There absolutely are. The world is genuinely hard right now. Housing is expensive. Wages haven’t kept up. Young people are struggling in ways my generation didn’t have to. Those problems are real.

But on top of the real problems, there is a synthetic layer of outrage manufactured to keep you scrolling, afraid, and atomized. And that layer is inventing enemies that don’t exist while making you too tired to see the neighbors who do.

Fake Protests, Real Damage

Last fall I watched a video of a protest in what looked like downtown Chicago. The crowd was chanting. The signs were aggressive. A fire burned in the background. I sent it to Wyatt and said something like “the world is falling apart.”

Wyatt wrote back two days later: “That’s not Chicago. That’s AI. A guy in the comments traced it. Look at the signs, they don’t spell anything.”

I went back and looked. He was right. The signs were gibberish. The fire behaved strangely. One of the protesters had six fingers. I had looked at it for ninety seconds and I had felt fear and sent it to my brother and I had spread it. Me. The lady who writes about trading with a cat on her lap. I was part of the problem that afternoon without ever meaning to be.

I’m telling you this because if I can be fooled—and I am, at least by my own admission, a fairly careful person—then a fifteen-year-old can be fooled. A seventy-year-old can be fooled. Your mom can be fooled. Your senator can be fooled. And when everyone is walking around afraid of things that aren’t happening, real things start happening anyway. Because fear is real even when its source is fake.

The Phone Call

I called Mr. Turner that night. I was still on the balcony. Riley had abandoned me for the couch.

“Mr. Turner,” I said. “I don’t know how to end this article. I know what’s wrong. I can see it. But I can’t figure out where hope lives anymore.”

There was a long pause. Mr. Turner often uses a pause where most people would use a paragraph.

Then he said: “Claire, what did your grandmother do the night you were supposed to graduate high school and the weather canceled the ceremony?”

I had told him that story once, years ago. I was surprised he remembered.

“She baked me a cake,” I said. “And Wyatt drove into town to get the diplomas and brought them back. And Grandpa made a speech in the kitchen.”

“Right,” he said. “The world didn’t cooperate. And your family made the graduation anyway. That’s where hope lives, Claire. Hope has never lived in the news cycle. Hope lives in the kitchen. Hope lives in the neighbor who shows up. Hope lives in whoever is willing to stop scrolling long enough to bake somebody a cake.”

I was quiet for a minute.

“Write that,” he said. “Write that.”

A Small True Story

So let me tell you one more story before I wrap this up. It’s small. It happened last month. I almost didn’t put it in this article because it felt too quiet.

There’s a woman in my building named Marisol. Two kids. She works doubles at one of the casinos on the Strip. I know her because Riley got out last November and she brought him back to me and wouldn’t let me give her anything for it. “We all watch each other’s cats,” she said, like that was a rule I should have known.

In March her youngest, Mateo, turned seven. And the week of his birthday she got her hours cut. I found out from the mail lady in the lobby. I thought about it for about an hour and then I went upstairs and I wrote a card and I put in some cash and I knocked on her door. She wouldn’t take it at first. I told her it was a loan. She told me it was charity. I told her it was neighbors. She looked at me for a long time and then she hugged me and she cried for about four seconds and then she got her dignity back and we talked about the weather.

That was it. That was the whole thing. It didn’t trend. It wasn’t a movement. No algorithm ever saw it. Mateo got a birthday. Marisol paid some bills. Riley has a neighbor who will still catch him if he runs again.

That’s where hope lives. Not in the feed. In the hallway.

To the Generation I’m Writing To

If you are twenty-three and reading this, I want to say three things directly to you.

One. You are not the generation the algorithm told you you are. The algorithm is showing you the loudest, saddest, angriest, most doomed version of your cohort because that version keeps your eyes on the screen. But most of your generation is working two jobs, loving somebody badly, trying to figure out their health insurance, raising a kid or thinking about it, calling their mom, changing their mind, growing up. You are in good company. The feed lies about your company.

Two. The economic problems are real and they are not your fault. Housing costs, wage stagnation, student debt, and the rising cost of groceries are structural. They are not evidence that you failed. They are evidence that you showed up to a system that was already broken and you’re trying to figure it out. Be kind to yourself about that. Also: learn how money works. Read this magazine. Read others. Talk to old people who have seen cycles. Most of what I have learned about markets I learned from a man whose kitchen table has been doing math for forty years. Old people are not the enemy. They are the manual.

Three. The bots will try to convince you to hate the person on your floor. Don’t. Go knock on their door. Borrow their lawn chair. Learn their dog’s name. This is how civilizations have always been built and it is how they will be rebuilt again when this one finishes its current bad chapter. Civilization is a neighborhood, not a feed.

What I’m Taking Back to the Ranch

I’ll be back to trading next month. I’ll tell you about whatever crude oil did to me in May, and probably something embarrassing involving a spreadsheet. Riley will be judgmental. Mr. Turner will say something wise in a long pause. Normal service will resume.

But I wanted to take this one issue and say, from my corner of the magazine to yours: it’s going to be okay. Not because the headlines are okay—they aren’t. Not because the news cycle will calm down—it won’t. It’s going to be okay because there are still people baking cakes and knocking on doors and catching each other’s cats in the hallway. That has never stopped being true. It’s just harder to see from inside the feed.

Put the phone down for a minute. Go look at the sky.

I’ll see you next month.

— Claire

Here’s something I learned in my first year out of college, working nights for a real-estate company that flipped distressed houses. The best time to buy a property wasn’t the day the listing went up. The best time to buy was the day after the open house, when the flakes had wandered off and the seller had realized that the three interested parties were only two. You’d get a call back. The price would soften. The nerves had done their job.

Thirty years later, I trade the market the same way.

I’ve been at this since 1996. Founding member of TradeMentors.com. Thirty years of screen time, indicators tested, systems built, systems broken, systems rebuilt. If you ask me what I have to show for all of it, the honest answer is one good pattern and the discipline to wait for it.

The pattern is called ABCD. Four letters. Four signals. And once you know what to look for, you’ll see it on every chart you open for the rest of your career.

What You’re Looking For

Every price move in an up-trending market tells the same story. Buyers push, profit-takers sell, buyers push again. The rhythm shows up on every timeframe. Daily charts. Hourly charts. Fifteen-minute charts. Doesn’t matter. The pattern is fractal.

Here’s what ABCD looks like in plain English:

• A — The market rallies. A clean series of green bars. Three, five, ten in a row. Higher highs and higher lows. This is the move telling you there are buyers present.
• B — The market pulls back. One red bar. Sometimes two. Rarely three. This is the profit-takers doing their thing — taking partial gains off the rally. It’s not a reversal. It’s a breath.
• C — The decision point. This is where you do your job. You either enter on the pullback with a limit order, or you wait for the market to prove itself and buy in on the continuation. Both are valid. I’ll tell you which one I prefer and why.
• D — The continuation. The first green bar that takes out the high of the pullback. This is the confirmation that the buyers are back in charge. The rally resumes.

Four letters. That’s the whole trade. No Elliott Wave. No Fibonacci retracements drawn with two different tools that disagree with each other. No proprietary indicator with fifteen settings. Just the rhythm of buying and selling, made visible by the candles on your screen.

Why the Pullback Matters

Here’s where I lose the impatient traders. The part of ABCD that trips people up isn’t A. It isn’t D. It’s B. The pullback.

New traders hate the pullback. They see a rally and they want in. They buy the top green bar because it feels safe — the crowd is buying, the momentum is strong, the news is positive. That’s called buying strength, and it’s the most expensive entry you can make.

Think of it like buying a house. If you show up to the open house and you put in a full-ask offer while the listing agent is still handing out the brochures, you just paid retail. You overpaid. You’ll feel the overpayment the first time the market wiggles. That’s exactly what buying the top of an A move feels like. The next pullback — which is coming, because pullbacks always come — will hit you emotionally because you paid the highest price of the run.

The pullback is your chance to do what professionals do. Wait for the open house crowd to leave. Wait for the nerves. Wait for the seller to soften. In market terms: wait for the one or two red bars. That’s the price softening. That’s the buyer’s advantage.

The Two Entries

So you’ve identified A — a clean rally of green bars. Now you see B — the pullback. One red bar. Maybe two. The rally has paused.

You have two choices at point C. Here’s how I think about each one.

Choice 1: The Limit Order Ladder. You place a buy limit order in the pullback zone — below the current market — and wait for price to come back down to you. There are two natural levels, and you can use either one or both:

• Limit 1 (Qty-1): just below the close of the first red bar. The conservative entry — fills on even a shallow continuation of the pullback.
• Limit 2 (Qty-2): at or below the low of the second red bar. The deeper entry — only fills if the market keeps falling another step.

When I’m running both limits as a scale-in, Limit 1 fills first (smaller discount) and Limit 2 only fills if the pullback runs deeper (bigger discount). Average price ends up somewhere in between, but the position is bigger when the trade is at its best entry.

Your stop sits below A — the low where the rally began — protecting all your fills with a single defined risk number. As the market resumes the trend, you take first profit on Qty-1 at the next resistance, letting the deeper-entry contract ride for the full continuation.

I use the limit ladder when I have high conviction in the underlying trend and when the pullback is happening on low volume — both signs that the dip is shallow and the market is more likely to come down to my price than break trend.

Choice 2: The Breakout. You wait. You don’t try to catch the pullback. You watch the red bars form, and then you wait for the first green bar that makes a new high above the pullback’s highest point. When that candle prints, you buy.

The breakout entry is the disciplined entry. You’re paying a slightly higher price, but you’re only buying after the market has confirmed that the rally is resuming. You miss the discount, but you also skip the trap where a “pullback” becomes a full reversal. I use breakout entries when the overall market is choppy, when I’m trading a stock I don’t know as well, or when I just want to let the market prove itself before I commit capital.

After thirty years of running both approaches, my honest preference is about 60/40 in favor of the breakout entry. The limit order catches more pips per winning trade. The breakout entry catches more winning trades. For most traders — especially traders who don’t have all day to watch a screen — the breakout entry produces a smoother equity curve.

A Walkthrough

Let me put numbers on it. This is hypothetical but typical.

You’re looking at a daily chart of a stock — doesn’t matter which one, the pattern is the same — and you see the following sequence of closes over seven trading days:

Day 1: $48.20 (green)
Day 2: $49.05 (green)
Day 3: $50.15 (green)
Day 4: $51.00 (green)
Day 5: $50.35 (red) ← pullback starts
Day 6: $49.80 (red) ← two-bar pullback complete
Day 7: ?

By the end of Day 6, you have your A (four green bars of clean rally) and your B (two red bars of measured pullback, not breaking below the Day-3 low). Now you’re at point C. You have a decision to make.

Limit-order entry: With Day 6 closed at $49.80, you place two limits for Day 7:

• Limit 1 (Qty-1): $50.20 — just below the close of the first red bar ($50.35). Will fill if Day 7 retests Day-5 territory.
• Limit 2 (Qty-2): $49.50 — below the low of the second red bar (~$49.65). Only fills if the pullback runs deeper than Day 6.

If only Limit 1 fills, you’re in at $50.20. If both fill, your average is around $49.85. If neither fills, the market rallied without you and you take the breakout entry instead.

Breakout entry: You wait for a green bar on Day 7 (or Day 8) that takes out the $50.35 high of the pullback. When it prints, you buy on the break. You might pay $50.50 or $50.80, but you’re only in the trade after the market has told you “yes, the rally is back on.”

Both entries share the same stop-loss placement: below A — the low where the rally started, around $48.00 (just under the Day 1 close of $48.20). The stop is wider than the pullback alone would suggest, but it protects the full pattern through the natural retest zone. The profit target stays the same — next resistance level, or a 2:1 reward-to-risk ratio measured from your average entry.

The Mistakes I Still Watch New Traders Make

In my thirty years of teaching technical analysis — first one-on-one with clients, now through TradeMentors.com — I’ve seen the same four mistakes repeat themselves in every generation of traders who come through the door.

Mistake #1: Entering during A. The rally looks strong, so they buy. They haven’t waited for the pullback. They’re paying top-of-run prices. The next red bar panics them out at a loss. Don’t enter during A. Wait for B.

Mistake #2: Confusing B for a reversal. Two red bars appear and they decide the trend is over. They sell, or they short. They miss D entirely when the green bar takes out the pullback high and the rally resumes. A one- or two-bar pullback in a healthy trend is a buying opportunity, not a sell signal. Three or more red bars is a different conversation — now you’re looking at a possible trend change. That’s why I rarely enter when the pullback extends past two bars.

Mistake #3: Forgetting the stop. Every ABCD trade has a stop. It goes just below the low of the pullback — the lowest tick of the B candles. If the market breaks that level, you’re wrong about the trend and you take the small loss. The worst trades I’ve ever seen new traders make weren’t bad entries. They were good entries with no exit plan. Know your stop before you hit buy.

Mistake #4: Revenge-entering after a missed trade. You set a limit order, you didn’t get filled, and you watched the market rip 3% without you. Now you’re tempted to chase the move at an inflated price because you feel like you missed out. Don’t. There will be another ABCD setup. The market prints these patterns constantly on every timeframe. Patience costs you an occasional missed trade. Impatience costs you your account.

How to Practice This

Open any chart you trade. Daily timeframe is a good place to start, because it slows the pattern down and lets you see the structure clearly. Pull up the last six months of price action. Now look at it with the ABCD framework in mind.

You’ll start seeing the pattern everywhere. Rally, pullback, continuation. Rally, pullback, continuation. Some setups will be textbook. Some will be messy. Some will fail — the pullback becomes a reversal, or the continuation never comes. That’s normal. No pattern works every time. The ABCD setup, in my three-decade experience, works somewhere around 65% of the time when the overall market environment is trending. That’s all you need. Combined with a 2:1 reward-to-risk ratio on your exits, a 65% win rate produces a consistently positive expected value.

Paper-trade it for a month before you put real money on it. Keep a journal. Write down the A sequence, the B pullback, your entry style (limit or breakout), your stop, your target, and the outcome. After twenty trades, you’ll know whether the pattern fits your temperament and your account. If it does, you’ve got a setup you can trade for the rest of your career. If it doesn’t, you’ve saved yourself from a worse discovery down the road.

The Bottom Line

Thirty years of trading, and the pattern I come back to is this simple. A rally. A pause. A decision. A continuation.

The market doesn’t reward cleverness. It rewards consistency. ABCD has been printing on charts since charts existed, and it’ll be printing on whatever replaces them in 2056. Your job isn’t to find the next exotic pattern. Your job is to find one pattern you trust, wait for it to show up, and pull the trigger when it does.

The best trade is the one you planned before the market opened. Everything else is just reacting.

Congress doesn’t insider-trade. They just happen to have excellent timing.

That’s the joke. The punchline is public record.

Every member of the United States House of Representatives and Senate is required by the STOCK Act of 2012 to disclose personal stock transactions within forty-five days. The disclosures are filed as PDFs, uploaded to the websites of the Clerk of the House and the Secretary of the Senate, and then promptly ignored by approximately everyone. A handful of organizations — Unusual Whales, QuiverQuant, Capitol Trades, the 2iQ database — scrape those filings into structured data. I have been reading them every Sunday night for three years, and the same pattern keeps repeating itself.

A senator buys $50,000 to $250,000 of a defense contractor. Six weeks later, the Pentagon awards that contractor an eight-figure contract. The senator’s position appreciates twenty percent. The senator files the disclosure on the statutory deadline. The cycle resets.

This isn’t tinfoil. This is publicly available SEC and House data. You can verify every word of what I’m about to write by opening three tabs.

What I want to do in this piece is walk you through what the disclosures are telling us about summer 2026 — which sectors Washington is positioned in, which contracts are coming, and how a retail investor with a discount brokerage account can ride the same wave without the ethics problem.

Why Summer Matters

Defense procurement runs on a fiscal calendar that does not match the stock market’s calendar. The U.S. federal fiscal year ends September 30. In the preceding months — May through August — Congress finalizes the National Defense Authorization Act (NDAA) for the following year and the Pentagon rushes to obligate unspent funds before they revert to the Treasury. “Use it or lose it” is not just a federal-employee folk tale. It’s a legally enforceable appropriations principle.

The practical effect: the largest Pentagon contracts of the year are frequently announced between June and September. Not because there’s a summer war, but because the accounting cycle demands it. The defense sector doesn’t move on headlines. It moves on contracts. And the contracts cluster in the summer.

Congressional trading activity clusters in the preceding weeks. That’s the thread. That’s the thing I want to pull.

The Pattern on the Page

Let me show you what I mean with a documented historical case. I’m using a pattern that has repeated across multiple members and multiple tickers. The names change. The mechanics don’t.

A senator who sits on the Senate Armed Services Committee files a disclosure showing a purchase of Raytheon (now RTX) in the $100,001 to $250,000 bracket. The trade date is sometime in early spring. The disclosure filing hits the Clerk’s website forty-two days later. In the four weeks after the disclosure becomes public, the Pentagon announces a $1.2 billion contract modification for Raytheon missile systems. The stock appreciates fifteen percent. The senator, when asked by a reporter, issues a written statement indicating the trade was executed by a financial advisor without the senator’s knowledge.

That statement is almost certainly true. Members of Congress use investment advisors precisely so they can claim this kind of plausible deniability. What it doesn’t explain is why the advisor, who has never bought this particular stock for this particular senator before, suddenly develops an interest in Raytheon six weeks before a major contract award.

I don’t need to prove causation to show you the correlation. The correlation is what’s actionable.

The Four Sectors I’m Watching

Based on congressional disclosure filings from the first quarter of 2026, the defense-adjacent buying clusters in four specific sectors. I’ll walk through each one.

1. Munitions Replenishment. The Ukraine conflict has emptied U.S. weapons stockpiles faster than the defense industrial base can replace them. Javelin missiles, Stinger missiles, 155mm artillery shells, Excalibur precision rounds. The Pentagon has awarded multi-year replenishment contracts to Lockheed Martin (LMT), Raytheon (RTX), Northrop Grumman (NOC), and General Dynamics (GD). The contracts continue to expand as the conflict persists. Congressional buying in this cluster has been heavy in the first quarter.

Watchlist: $LMT, $RTX, $NOC, $GD, $TDG (TransDigm, the less-famous parts supplier that feeds all of the above).

2. Unmanned Systems & Drones. The lesson of the last three years of armed conflict has been that small, cheap, attritable drones are now central to modern combat. The Pentagon’s Replicator initiative has committed billions to fielding thousands of autonomous systems. The beneficiaries are smaller, more specialized contractors.

Watchlist: $AVAV (AeroVironment — Switchblade drones), $KTOS (Kratos Defense — unmanned aerial targets and tactical drones), $PLTR (Palantir, the software layer that coordinates the data).

3. Nuclear & Submarine Infrastructure. The AUKUS agreement committed the United States to supplying Australia with Virginia-class nuclear submarines. The Columbia-class submarine program is ramping up simultaneously. The domestic nuclear industrial base — specifically the firms that build reactor components and enriched uranium — is about to see the largest spending surge in forty years.

Watchlist: $BWXT (BWX Technologies — nuclear reactor components, also a player in my November 2025 FogBank investigation), $GD (General Dynamics Electric Boat — submarine hulls), $HII (Huntington Ingalls — shipyards).

4. Software, AI & Command Systems. Every modern weapons system is becoming a software problem. The companies writing the code are quietly capturing a larger share of defense budgets than the companies building the hardware. This is the sector I find most interesting, because the multiples are expanding faster than the revenue is.

Watchlist: $PLTR (Palantir, again — the software backbone of multiple combatant commands), $LDOS (Leidos — IT services and systems integration), $J (Jacobs Solutions — engineering and command infrastructure), $ANET (Arista Networks — the networking hardware underneath the AI data centers that the Pentagon is building at scale).

The Self-Aware Pause

I need to stop for a moment and be honest about what I am and am not doing in this article. This is the part of the investigation where I earn your trust by telling you what I don’t know.

I do not have access to non-public congressional trading data. Nothing in this piece is based on insider information, leaked filings, or any source that wouldn’t hold up in court. Everything I’m referencing — the STOCK Act disclosures, the Pentagon contract awards, the fiscal-year procurement calendar — is publicly available on government websites and mirrored by commercial services like Unusual Whales, QuiverQuant, Capitol Trades, and 2iQ.

I also do not know with certainty which specific members of Congress are buying which specific names this quarter. The data lags. By the time you read this piece, some of the Q1 disclosures will be public and some will still be working through the forty-five-day reporting window. If you want the most current picture, the three services I’ve named above all offer subscription tiers that will let you pull the data yourself. I recommend it. The raw data is more interesting than my commentary on it.

And finally: I’m not connecting dots that aren’t there. I’m showing you dots that are already connected by the government’s own filing requirements. If the connections disturb you — if you think sitting senators shouldn’t be allowed to trade individual stocks in the sectors they legislate — that’s a reform conversation that belongs in a different magazine. My job is to tell you how to read the data that exists.

What the Data Is Telling Us Right Now

Three signals I’ve picked up over the past ninety days, presented without commentary beyond the data itself:

Signal 1: Multiple members of the Senate Armed Services Committee and House Armed Services Committee have disclosed purchases of unmanned systems names in Q1 2026. $AVAV and $KTOS appear on more disclosure filings than any other defense name in the quarter.

Signal 2: The Pentagon’s FY2026 budget request specifically earmarks an additional $8.3 billion for munitions replenishment, a 41% increase over FY2025. The congressional markup process for the NDAA — which happens in May and June — will determine which contractors get priority funding. Committee members are buying before the markup, not after.

Signal 3: $PLTR disclosures have appeared in the filings of members from both parties at a rate that does not match any other individual defense name. When members on opposite sides of the aisle converge on the same ticker, that’s statistically anomalous and probably worth paying attention to.

None of this constitutes a recommendation to buy any specific stock. It constitutes a map of where the public money is likely to flow over the next four months. What you do with the map is your business.

The Summer Watchlist

If I had to reduce this article to a single printable page, it would look like this:

Sector	Thesis	Primary Tickers
Munitions Replenishment	Stockpile rebuilds funded by multi-year contracts	$LMT, $RTX, $NOC, $GD, $TDG
Unmanned Systems	Replicator initiative, drone warfare doctrine	$AVAV, $KTOS, $PLTR
Submarine / Nuclear	AUKUS + Columbia-class ramp	$BWXT, $GD, $HII
Software & Command	Defense becoming a software problem	$PLTR, $LDOS, $J, $ANET

I would not advise buying every name on this list. I would advise watching every name on this list — particularly in the window between mid-May, when the NDAA markup begins, and late August, when the Pentagon’s final contract awards are announced. That’s your summer window.

Closing

Washington moves money in patterns older than any of us. The defense budget is the largest discretionary line item in the federal government. The people who write the legislation that controls that budget are permitted, by a law they themselves wrote, to trade the stocks affected by their own decisions. The disclosures are public. The contracts are public. The only thing that is not public is the intention behind the timing.

That’s the part I can’t prove. That’s the part that will always require a raised eyebrow instead of a courtroom verdict.

But the correlation is there. It is measurable. It has persisted across administrations of both parties for as long as the STOCK Act has required disclosures. You don’t need a conspiracy theory to make money from it. You just need a calendar, a watchlist, and the patience to wait for the fiscal year to do what the fiscal year always does.

Every great investment thesis starts with a question nobody else is asking. This summer, the question is: what is Congress buying, and what are they buying it with?

The filings are waiting for you. The contracts are coming.

I want to tell you about a casino.

Not a real one. A mental model of one. Stay with me, because this is going to explain why, after thirty-five years of selling options premium, I never let a short option expire.

Imagine you sit down at a blackjack table with $100. You play well, you catch a few good hands, and two hours later you’re up to $190. You’ve nearly doubled. The pit boss smiles at you. The waitress brings you a drink. The dealer is friendly. The casino has no reason to be nervous yet.

Now imagine you decide to play one more hour. Just one more. You’re going to push this run up to $200. That last ten bucks is the round number you told your spouse about. You want the clean story.

This is the hour the casino gets all of its money back. Every time.

That extra hour, that extra ten dollars, that last ten percent of your upside — the casino prices that into its business model. It knows you’re going to stay too long. It knows you’re going to give back the winnings chasing the round number. That’s not an accident. That’s the house advantage.

Premium selling works exactly the same way. And the casino, in this case, is the market.

The Trade That Got Me to Write This Article

Two weeks ago I sold a put option on one of our income names. I won’t name the ticker, because the lesson is the same regardless. I sold the put for $1.00 of premium. Six weeks to expiration. Delta around 0.20. Standard setup. Normal day at the office.

Twelve trading days later, the put was worth $0.10. The underlying had held up. Volatility had compressed. Time had done its work. I had captured ninety cents of the original dollar — ninety percent of the maximum profit on the trade.

Here’s the question every options seller faces at that moment: do I close the position, or do I let it ride?

The textbook answer, the one you’ll hear on most trading podcasts, is to close the position and redeploy the capital. Take your 90%, book the win, move on. That’s what I did. That’s what I always do. I want to spend the rest of this article explaining why that rule is not optional, why the last ten cents is the most expensive money on the table, and why the trap gets worse the more profitable your trade has been.

Theta Isn’t a Line. It’s a Hockey Stick.

Here’s the piece of math every premium seller needs to internalize. Time decay — theta — is not linear. The option doesn’t lose value at a steady rate from entry to expiration. It loses most of its value early when you don’t want it to, and then it holds onto the last fragment of value like a drunk holding onto a bar stool at closing time.

The Black-Scholes formula, which is the mathematical foundation of option pricing, treats theta as a function of the square root of time remaining. What that means in plain English is this: a $1.00 option that has sixty days to expiration doesn’t go to $0.50 in thirty days. It goes to about $0.70. It only reaches $0.50 somewhere around the twenty-day mark. It reaches $0.20 around the ten-day mark. And it hovers stubbornly above zero for most of the final week.

The casino side of this is what happens to risk during that same decay curve. Gamma — the rate at which delta changes — explodes in the final two weeks. An option that started as a safe 0.20 delta can become a 0.50 delta overnight on a single news event. Your small, comfortable short premium position becomes a leveraged directional bet, and you didn’t sign up for that at the open.

So here’s what you’re really being offered when you hold for the last ten cents of a one-dollar premium trade:

• You’ve already captured ninety cents of profit.
• The remaining ten cents will take longer to collect than the first ninety cents did.
• During that time, your gamma risk is at its highest point of the trade’s entire lifecycle.
• A single adverse move — earnings, a Fed statement, a geopolitical shock — can erase the entire ninety cents you already earned, and possibly more.

You’re risking a dollar of unrealized profit for the chance to earn a dime. That is not a trade I know how to recommend to any student of mine with a straight face.

The Actual Math

Let me put real numbers on this, because the concept lands harder when the math is in front of you.

You sold an option for $1.00 premium. You’re currently holding it at $0.10. Your unrealized profit is $90 per contract (options are priced per share, so a $0.90 gain on 100 shares equals $90).

The two possible outcomes from here, simplified:

Scenario A (probability ~85%): Nothing happens. The option decays to zero over the next week or two. You earn an additional $10 per contract. Your final profit: $100.

Scenario B (probability ~15%): Something happens. The underlying moves against you. The option goes from $0.10 back to $1.00 or $2.00 or $5.00. Your unrealized profit evaporates and you finish with a loss. Range of outcomes: anywhere from −$100 to −$400 per contract.

Now we do the expected value calculation. Multiply each outcome by its probability:

0.85 × (+$10) = +$8.50
0.15 × (−$200, midpoint) = −$30.00
Expected value of holding = −$21.50 per contract

The trade has a negative expected value in the final ten percent. You’ve already made the money. Holding longer is, on average, a losing proposition.

Now run the same exercise for the choice to close the position at $0.10 and redeploy the capital into a new trade with a fresh credit. Your realized profit is locked in at $90. Your margin is free. Your risk is reset. You can open a new position with a new premium, a new expiration, a new delta — and you’re back in control of the terms.

The professional choice is obvious. The retail choice, out of habit and optimism, is usually the wrong one.

The Rule I’ve Traded for Twenty Years

Here’s the rule. It’s one sentence, and I have it taped to the monitor in my Southern Utah office.

Close every short premium position at 80 to 90 percent of maximum profit. No exceptions.

Eighty to ninety percent. Not ninety-five. Not a hundred. The moment the position shows me that it’s captured the vast majority of the premium I sold, I close it and move on.

The discipline of this rule produces three effects that compound over time.

First, it removes path-dependent risk. The longer you hold an open short-premium position, the more opportunities the market has to surprise you. Closing early at 80-90% removes the back half of the decay curve — which is exactly where gamma risk lives.

Second, it increases capital turnover. A put option I close at 80% in three weeks frees up margin that can be redeployed into the next trade. Over the course of a year, this turnover produces more total profit than holding to expiration ever would, because the capital is working harder.

Third, it eliminates assignment risk. A short put or short call that goes to zero because the underlying moved in your favor is wonderful. A short put that gets assigned because the underlying gapped below strike overnight is not wonderful. Closing early at 80-90% means you’re almost never carrying the position close enough to expiration to face assignment risk in the first place.

What Breaks the Rule

I’ve said “no exceptions,” but I want to be intellectually honest. There are situations where the 80-90% close is less critical, and there are situations where it’s more critical.

Less critical: Deep out-of-the-money positions on names that are not exposed to near-term earnings, regulatory catalysts, or Fed meetings. If you sold a put on a stable dividend aristocrat with no news expected for three weeks, the last ten percent is not going to kill you. You still should close it, but the urgency is lower.

More critical: Short positions on high-beta names heading into earnings. Short positions on tickers with upcoming FDA decisions, regulatory rulings, or scheduled macro data. Short positions during Fed weeks. Any of those situations multiply the gamma risk in the final stretch. If you’re sitting on an 85% winner going into an event, close the position before the event. You’ll thank me on the other side.

The broader principle is this: treat every open position as a fresh decision. At any given moment, if you would not open this exact trade today at these exact prices, you should not be holding it. The fact that you opened it at better terms two weeks ago is not a reason to maintain the exposure. The market doesn’t remember what you paid. It only responds to what you’re risking right now.

The Mental Model That Changed Everything For Me

I ran premium-selling strategies for the first fifteen years of my career without this rule. I held to expiration. I watched trades go from 90% winners back to losers. I had a few catastrophic weeks that I still remember with the specific clarity that expensive mistakes produce. In those fifteen years I made a decent living, but my equity curve looked like a heart rate monitor during a nightmare.

The change came from a conversation I had with a commodity trader at a conference in 1998. He told me something I’ve never forgotten: “The last move in your favor is never worth the first move against you.”

That sentence reshaped how I think about every short premium trade I’ve opened since. The last dime of an option I’ve already collected ninety cents on is not worth the first dime of a reversal that could go to ten dollars. The asymmetry runs against me once I’m in the back half of the trade. I need to take my money and leave the table.

The casino knows I’ll want to stay. That’s the business. My job is to remember that I don’t have to cooperate.

What This Looks Like in a Portfolio

If you implement the 80-90% rule across a portfolio of short premium trades, here’s what changes over a quarter:

• Average holding period drops by roughly 35%. Positions that used to run forty-five days now close at thirty.
• Number of trades per year rises proportionally. You’ll open 30-40% more positions than you did before, because capital turns over faster.
• Win rate on individual trades stays roughly constant, but large losses become substantially rarer, because you’re not holding positions through the gamma-risk window.
• Maximum drawdown shrinks materially. This is the one that matters most. The worst month of a disciplined premium seller using the 80-90% rule is usually half the drawdown of an undisciplined seller who holds to expiration.

Your compounding looks different as a result. A premium-selling program that turns capital faster, with tighter drawdowns, produces smoother equity curves and higher risk-adjusted returns than the same program held to expiration. This is not a theoretical claim. It’s the result I’ve measured in my own records across decades.

The Philosophical Close

Trading is a business. It is not a casino game, and it is not a hobby. Every position in your portfolio is a capital commitment that should be evaluated daily against the alternatives available to that capital.

The last ten percent of any short premium trade fails that evaluation, almost universally. The remaining reward is small. The remaining risk is large. The time-to-collect is disproportionate to the dollars available. And the opportunity cost of tying up margin in a nearly-complete trade, when fresh trades are available at full premium, is the kind of slow bleed that most retail traders never diagnose because it doesn’t show up as a single loss.

Close the trade. Book the 85%. Walk to the cashier. The casino wants you to stay. That’s precisely why you shouldn’t.

The best traders I have ever known share one characteristic that the public rarely notices: they are exceptionally comfortable leaving money on the table. They understand that the last dime is the casino’s dime. They let the casino have it, and they take their winnings and redeploy them at fresh odds.

If there is one habit I could give every premium seller I’ve ever taught, it would be this one. Exit at 80-90%. No exceptions. Ever.

The money you leave on the table is the money that keeps you in business.

Microchip Technology Inc. (NASDAQ: MCHP), headquartered in Chandler, Arizona, is a leading supplier of embedded control solutions—the specialized microcontrollers, analog chips, and mixed-signal components that power everything from industrial automation equipment to electric vehicle battery management systems, medical devices, home appliances, and defense/aerospace applications. Unlike its high-profile competitors in the AI semiconductor space, Microchip serves the unglamorous but structurally vital markets that keep the physical world running.

The company endured a brutal 18-month inventory correction through late 2024 and early 2025 as its industrial and automotive customers worked down pandemic-era chip stockpiles. Revenue troughed in mid-2025, and the stock followed—declining from a 2023 high above $95 to a 2024 low near $48. Since that low, MCHP has rallied over 35% as inventory normalization, factory utilization recovery, and improving order-book visibility have restored confidence in the business model. The question for May 2026 is whether this recovery has the legs to sustain a second-half breakout—and whether the seasonal tailwind TradeMiner has flagged (83% win rate over 12 years, May 8 through June 5) is the right vehicle to express that thesis.

Editorial note: MCHP is also one of this month’s three featured seasonal trades—see the Seasonals article for TradeMiner’s 12-year historical performance data.

Past performance is not indicative of future results. This analysis is for educational purposes only and does not constitute a recommendation to buy or sell any security. Always use proper risk management and position sizing.

The old Wall Street adage “Sell in May and go away” is true on average. It is not true everywhere. While the broad S&P 500 historically underperforms between May and October, the seasonal data reveals a specific counter-pattern: certain individual names—particularly in the semiconductor sector—produce their most reliable annual gains precisely during the window the rest of the market is supposedly sleeping.

This month’s TradeMiner seasonal scan returned three of the strongest month-over-year patterns in the technology sector: Microchip Technology (MCHP), Tesla (TSLA), and NVIDIA (NVDA). All three kick off between May 8 and May 21. All three have produced win rates above 80% over periods ranging from 12 to 15 years. One of them—NVDA—has a 100% win rate over 14 years.

Taken together, they form what we’re calling the Tech Triple: three overlapping seasonal windows that, when combined, create a sustained 4-6 week period of bullish tech exposure running from the second week of May through mid-June.

Trade #1: $MCHP — Microchip Technology (May 8 – Jun 5)

The Setup: Microchip Technology has produced a reliable bullish pattern in the four weeks following May 8 for twelve consecutive years. The pattern coincides with Microchip’s fiscal reporting calendar, analyst day timing, and the industrial semiconductor sector’s typical demand pickup as fiscal-year budget allocations flow through the capital equipment supply chain.

The Data (TradeMiner Pro, 12 years):

• Win rate: 83.33% (10 of 12 years positive)
• Average profit: +10.36% / $2,590 per 100 shares
• Best year: 2020 (+30.2%) and 2025 (+34.39%)
• Worst year: 2019 (−6.57%)
• Holding period: 10-25 trading days
• TradeMiner Score: 4.44 / 5.00

Why It Works: Industrial semiconductor cycles tend to receive their annual visibility boost in May and June as automotive OEMs and industrial manufacturers finalize their second-half production plans. Microchip, whose revenue mix skews heavily toward industrial and automotive end markets, benefits from this forward-visibility improvement. See this month’s S.W.O.T.T. report for a full fundamental and technical analysis.

The Trade: Long MCHP entered on or near May 8, targeting exit by June 5. Position sizing should reflect the 9-day historic volatility of the name. A reasonable construction: buy 100 shares or a 60-day 0.70-delta call option expiring in July. Stop loss below the 100-day moving average.

Trade #2: $TSLA — Tesla Inc. (May 19 – Jun 18)

The Setup: Tesla has produced one of the most reliable individual-name seasonal patterns in the entire technology sector. Over fifteen years of trading history, the May 19 to June 18 window has closed positive in fourteen of fifteen years—a win rate that ranks in the top 1% of all tickers screened by TradeMiner.

The Data (TradeMiner Pro, 15 years):

• Win rate: 93.33% (14 of 15 years positive)
• Average profit: +13.96% / $3,490 per 100 shares
• Best year: 2023 (+46.45%)
• Only losing year: 2025 (−7.42%)
• Holding period: ~31 calendar days
• TradeMiner Score: 4.68 / 5.00

Why It Works: The late-May window coincides with Tesla’s Q2 delivery momentum building, historical pattern of summer product announcements, and cyclical acceleration of retail investor positioning ahead of the July earnings catalyst. The statistical consistency across multiple Tesla regimes—pre-split, post-split, pandemic, and post-pandemic—suggests the underlying driver is structural rather than coincidental.

The Trade: Long TSLA entered on or near May 19, targeting exit by June 18. Given TSLA’s historical volatility, position sizing should be more conservative than MCHP. Options traders may prefer a 60-day 0.65-delta call expiring in July, allowing exit on favorable moves without assignment risk on the underlying.

Trade #3: $NVDA — NVIDIA (May 21 – Jun 18)

The Setup: NVIDIA’s May 21 to June 18 window is the cleanest seasonal pattern in this month’s scan. Over fourteen years of trading history, the window has closed positive in every single year—a perfect 100% win rate with an average gain of 11.79%.

The Data (TradeMiner Pro, 14 years):

• Win rate: 100% (14 of 14 years positive)
• Average profit: +11.79% / $2,947 per 100 shares
• Best year: 2023 (+38.87%) and 2024 (+32.9%)
• Weakest year: 2022 (+1.82%)—still positive
• Holding period: 10-25 trading days
• TradeMiner Score: 5.00 / 5.00 (maximum)

Why It Works: NVIDIA’s late-May window coincides with its fiscal Q1 earnings announcement, which has historically delivered guidance upgrades and institutional positioning momentum. The 100% win rate spans NVDA’s entire transformation from a gaming-first company to the AI data center leader—suggesting the pattern is anchored to earnings timing rather than any specific business cycle.

The Trade: Long NVDA entered on or near May 21, targeting exit by June 18. Given NVDA’s current valuation multiples and elevated implied volatility around earnings, call options purchased in the days immediately following the earnings announcement—when IV typically crushes—may offer superior entry pricing than pre-earnings positioning.

The Tech Triple at a Glance

Ticker	Window	Years	Win Rate	Avg. Gain	Score
MCHP	May 8 – Jun 5	12	83.33%	+10.36%	4.44 / 5.00
TSLA	May 19 – Jun 18	15	93.33%	+13.96%	4.68 / 5.00
NVDA	May 21 – Jun 18	14	100%	+11.79%	5.00 / 5.00

Using TradeMiner

Each of these three setups was identified using TradeMiner Pro’s seasonal scanning engine, which backtests every calendar-based pattern across stocks, futures, and ETFs. If you want to find your own May setups—or scan ahead for June, July, and beyond—TradeMiner lets you filter by win rate, average return, holding period, and historical consistency. The seasonal charts on the following pages show the exact TradeMiner output for this month’s picks.

For a deeper dive into seasonal patterns, historical data, and monthly trading strategies, visit the Stock Market Almanac at stockmarketalmanac.com.

Past performance is not indicative of future results. Seasonal patterns are historical tendencies, not guarantees. Always use proper risk management and position sizing.