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Fundamentals
Realistic Strategies, Realistic Returns
Issues
There really isn’t too much to report at the moment. Our passive portfolios continue to impress in the midst of a challenging market which displays the overall power of the passive approach. And I continue to mostly sit on the sidelines in our active portfolios, although that approach will be changing soon. I intend on adding several new positions to the active portfolios this expiration cycle as we are starting to see some good entry prices for several of the companies on our watchlist.
At the close of the August expiration cycle, back on the 19th, the SPDR S&P 500 ETF (SPY) was trading for 422.14. Now it’s trading 3.7% lower at 406.60.

For the year the S&P 500 (SPY) is down 14.7%, while the tech-heavy Nasdaq 100 (QQQ) and small-cap Russell 2000 (IWM) indexes are lower by 22.8% and 15.7%, respectively.

Nothing has changed from last month’s issue. I still expect to see bouts of volatility going forward. I would like to say that most of the weakness is behind us, but unfortunately, I don’t have a crystal ball. Although, I will say that barring any real setbacks in inflation data or ongoing geopolitical concerns, I expect the market to hold the 2022 lows and potentially rally, particularly if inflation data subsides.
At the close of the August expiration cycle, back on the 19th, the SPDR S&P 500 ETF (SPY) was trading for 422.14. Now it’s trading 3.7% lower at 406.60.

For the year the S&P 500 (SPY) is down 14.7%, while the tech-heavy Nasdaq 100 (QQQ) and small-cap Russell 2000 (IWM) indexes are lower by 22.8% and 15.7%, respectively.



Nothing has changed from last month’s issue. I still expect to see bouts of volatility going forward. I would like to say that most of the weakness is behind us, but unfortunately, I don’t have a crystal ball. Although, I will say that barring any real setbacks in inflation data or ongoing geopolitical concerns, I expect the market to hold the 2022 lows and potentially rally, particularly if inflation data subsides.

What a difference an expiration cycle makes!

The close of the June expiration cycle, back on the 17th, marked the low set in 2022. The SPDR S&P 500 ETF (SPY) hit an intraday low of 362.17 before rallying to close the June expiration cycle at 365.86.



Who knew that was just the beginning of what would become a historic short-term rally? Since then, the market has rallied an astounding 16.7%.

The close of the June expiration, back on the 17th, was witness to the low set in 2022. The SPDR S&P 500 ETF (SPY) hit an intraday low of 362.17 before rallying to close the expiration cycle at 365.86.

Since then, the market stalwart ETF has rallied 6.2%.



To put things into perspective, SPY was trading for over 410 when we first established positions back on June 3 before losing roughly 11% into the close of the June expiration cycle.



Thankfully, the bulls stepped back into the fray when the July expiration cycle began, prompting the 6% rally.

So far, so good. As of Friday, all three of our open positions are in the green, even though the overall market has pulled back rather significantly.

We still have a lot of trades to place as we begin to build out each one of the portfolios. So, that being said, I’m going to keep it rather short today as we are just in the early ramp-up phase of the five portfolios that reside in the Fundamentals service. This will no doubt be the shortest issue you will ever receive. Enjoy!

Today, I simply want to go over the ins and outs of the service so that you can efficiently and effectively take advantage of all the content provided including details on issues, trade alerts, webinars and more.

That being said, expect to start seeing several trade alerts over the next week. I will begin trickling out positions over the five different portfolios over the next few weeks. So have an understanding of what each portfolio is trying to accomplish.

Updates
Cabot Options Institute Fundamentals is focused exclusively on the Poor Man’s Covered Call strategy, which is a way to collect reliable gains from a relatively simple options strategy, without the substantial up-front cost of a regular covered call strategy.
Cabot Options Institute Fundamentals is focused exclusively on the Poor Man’s Covered Call strategy, which is a way to collect reliable gains from a relatively simple options strategy, without the substantial up-front cost of a regular covered call strategy.
Alerts
The Fed-induced rally yesterday has left a few of our positions with deltas that are shorter than we prefer. As a result, I want to buy back our short calls in those positions and sell more premium going out to a higher strike and further out in duration.
The Fed-induced rally yesterday has left a few of our positions with deltas that are shorter than we prefer. As a result, I want to buy back our short calls in those positions and sell more premium going out to a higher strike and further out in duration.
We want to bring the delta of our position back to “normal” state. In our terms “normal” means a delta between roughly 0.40 and 0.60. As it stands, with TLT rallying as of late, our deltas are near parity.
We currently own the IEF January 19, 2024, 85 call LEAPS contract at $19.00. You must own LEAPS in order to use this strategy.

We currently own the EEM January 19, 2024, 30 call LEAPS contract at $11.50. You must own LEAPS in order to use this strategy.
We currently own the TLT January 19, 2024, 85 call LEAPS contract at $29.10. You must own LEAPS in order to use this strategy.
With the November 18, 2022 expiration cycle only 11 days away, we need to start rolling a few of our positions. I plan on rolling the majority of our November short calls this week. Expect to see two to three more alerts as the week progresses.
After allowing our DBC October calls to expire worthless, we need to sell more premium against our DBC calls, this time for the December expiration cycle.
CVX jumped over the past two days. As a result, we need to roll our October 21 calls into November. The jump in the stock has pushed our return to upwards of 35%, while the underlying stock is sitting at a 7.0% gain since we added it to the portfolio.

We still have our DBC and CVX positions on for the October 21 expiration cycle. I intend to hold on to both and monitor how each performs as we lead up to the end of the October expiration cycle. As it stands, there is a good chance I will allow both to expire worthless and sell more call premium early next week. But as always, the price action over the coming days will dictate how we handle each position.
Before I get started I want to make clear that in my last alert I am selling the 97 call in IEF, not the 97.5. I am selling the 97 call for roughly $0.92. Sorry for any confusion.
The October expiration cycle comes to an end next week so it’s time to roll a few of our call positions that have little to no time premium left. I’ll be rolling several more positions over the next few days.
Portfolios
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
Strategy