How do I get rid of image placeholder on every post?

Sorry, this seems like a really silly question. But I am setting up Shapely for a photo blog. I love the theme, but every post I create has a grey image placeholder above the content image? I thought this was a featured image, but I am not setting any featured images on the posts. I even installed “Hide featured image” in order to tunr off the featured images call.

what am I not getting? Here is a sample page:

Thank you so much for developing gorgeous user friendly themes for WP!