Grow Your Pile | Weekly Market Commentary
Options Sellers Got Hit This Week - Welcome to the House of Pain!
Week Ending March 27, 2026 — Week 13
Options Sellers Got Hit This Week
There’s no sugarcoating it — this was a brutal week for anyone short premium.
The VIX closed Friday at 31.05, a staggering +26.27% move on the week. That’s not a slow grind higher. That’s a volatility explosion. And when vega expands like that, every short option on your sheet gets repriced against you — instantly.
If you were short premium going into this week, your positions got marked wider, your P/L went red, and your buying power usage jumped. That’s the mechanical reality of being short vega in a vol expansion. Options prices rise across the board — calls and puts — and short sellers pay the price regardless of direction.
For the few traders who were long vega and short delta, this was a solid week. Protective puts gained value. Hedges finally earned their keep. If you had the discipline to carry insurance through the calm weeks, this is where it paid off.
Gold Finally Worked as a Hedge
After weeks of frustrating sideways action, gold rose +2.53% this week — and for those of us running gold positions as portfolio hedges, it was a welcome relief. When equities sell off and volatility spikes, gold is supposed to provide a counterbalance. This week, it did exactly that.
Momentum Traders Had a Good Week
Oil futures climbed +2% for the week, continuing their upward trend. Momentum-driven strategies that follow trend — long energy, long commodities — outperformed. This is a reminder that not every edge comes from selling premium. Trend-following and momentum have been quietly rewarding traders who are positioned correctly.
The Risk Management Reminder You Need to Hear
Here’s what this week should be teaching every options seller:
Size is the biggest killer in this market.
Not direction. Not timing. Not strategy selection. Size.
When VIX jumps 26% in a week, the difference between a manageable drawdown and a margin call is how much premium you had on. A well-sized portfolio absorbs a vol spike and lives to trade another day. An oversized portfolio gets forced out at the worst possible time.
Three things to check right now:
Your overall delta — How much directional exposure do you actually have? Every point the market moves, how much does your portfolio change? If you don’t know this number by heart, you’re flying blind.
Your buying power usage — If you’re above 50% BP on a Reg T account or above 40% on Portfolio Margin, you’re running hot. A week like this can push you into margin call territory fast.
Your ability to reduce — Can you take something off? Close a winner? Roll a loser out for credit? The best time to reduce risk is before the next leg down, not during it.
Reduce risk. Reduce deltas. Keep buying power in check.
These aren’t just words — they’re the difference between surviving a vol event and getting carried out.
Market Week in Review
Indices Scoreboard
Rates and Macro
The market continues to trade primarily off interest rates and Fed expectations. Recent data has been mixed — keeping the “higher for longer but data-dependent” narrative intact. For traders, this means equities are still behaving like a macro instrument, with real yields and the 10-year driving direction more than company fundamentals.
The bond market isn’t giving any relief. TLT traded flat this week, which means the long end isn’t pricing in any imminent easing. Until rates break meaningfully lower, the ceiling on equity multiples stays firmly in place.
Positioning and Flows
Price action this week was dictated more by positioning than by news. Systematic players are adding exposure on dips and cutting risk quickly on volatility spikes — leading to sharp reversals rather than sustained trends. This environment punishes anyone chasing moves and rewards patience and timing.
The VIX spike to 31 tells you that hedging demand surged. Institutions are buying protection, not conviction. That’s a defensive posture, and it usually means we’re closer to a short-term bottom than a top — but “closer” doesn’t mean “there yet.”
AI Leadership and Narrow Breadth
Large-cap tech and AI-related names continue to carry the indices while overall market breadth remains weak. The Nasdaq dropped 3.4% this week — significantly worse than the broad market — as the same names that led the rally are now leading the decline.
The surface strength of the past few months masked underlying fragility. When the leaders crack, the index has nowhere to hide. Small caps (IWM) actually held up better this week (+0.4%), which is an interesting divergence worth watching.
Volatility Regime
This week confirmed what we’ve been warning about: the low-vol regime is over, at least for now. VIX at 31 puts us firmly in elevated territory — above 30 is where premium gets expensive, hedges get costly, and positioning errors get punished.
For premium sellers, this is a double-edged sword. Yes, options are richer — which means better credits on new positions. But existing short positions are getting repriced against you. The key is being selective: don’t add just because premiums look fat. Add when the setup is right AND your BP can handle it.
Liquidity and Outlook
End-of-quarter rebalancing flows added noise this week — pension funds and institutions adjusting their books ahead of Q1 close. Some of the selling pressure was mechanical, not fundamental. That matters because it means the selling can stop as abruptly as it started.
Looking ahead, the setup is building for a sharp move in either direction. The VIX at 31 is pricing in big moves. The question is whether the next catalyst is a de-escalation (bounce) or an escalation (breakdown). Either way, the move will be violent.
The Bottom Line
This was a tough week. SPY down 2.2%. Nasdaq down 3.4%. VIX up 26%. Anyone short premium felt the pain.
But tough weeks are part of the game. They’re the cost of admission for running income-generating strategies. The traders who survive weeks like this are the ones who respected their size going in.
What to do now:
Review your delta exposure — know your number
Check your buying power — if it’s stretched, reduce
Don’t panic-add short premium just because it’s rich — that’s how you compound the problem
Let your hedges work — gold, long puts, call spreads — this is exactly when they earn their keep
Be patient — vol spikes create opportunity, but only for those who have dry powder to deploy
Five consecutive down weeks in the S&P. History tells us this doesn’t last forever. But history also tells us the bottom comes when it comes — not when we want it to.
Stay disciplined. Manage your size. Keep your powder dry.
— TonyB & TonyR Grow Your Pile
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