We have two positions on at the moment, both due to expire at the June 16 expiration date. Fortunately, both are hovering around the same price we sold them for, so all is well at the moment. And given we are leaning slightly bearish in both positions, a move lower should certainly help both positions and possibly lead to some early profit taking.


My hope this week is to add one more trade to the June 16 expiration cycle, preferably a bullish leaning trade to balance out the deltas in the portfolio. Otherwise, we will simply sit on our hands and allow time decay to work in our favor.

We are 18 days away from the May 19, 2023, expiration cycle coming to a close and the three remaining May positions all remain in good standing. Moreover, time decay continues to accelerate, which has already started to give us an opportunity to roll our positions in an attempt to collect more premium.

We locked in profits in both PFE and KO and immediately sold more premium last week and if all goes well this week, I intend to do the same with the remaining three May positions.

*Since we started the Income Trader service back in early June 2022, we’ve brought in a total of 69.14% in income. My hope is that we can step up our gains even further by adding as we progress through 2023.

Led by mega-cap tech stocks, the indexes tacked on modest gains last week. The S&P 500 rose 1%, the Dow added 0.84%, and the Nasdaq gained 0.7%.

Led by mega-cap tech stocks, the indexes tacked on modest gains last week. The S&P 500 rose 1%, the Dow added 0.84%, and the Nasdaq gained 0.7%.

After another month of dramatic declines in March, cannabis stocks showed a little more stability in April.

This is encouraging, even though it is never really possible to “call the bottom” in out-of-favor groups.

How out of favor is cannabis? I’ve invested through three bear markets, and I don’t think I have ever seen a group as unloved as cannabis is now. Remember, this is a good thing if you are a contrarian investor looking for bargains, as long as the group in question is not a value trap. (Like the declining newspaper industry years ago, a value trap that Warren Buffett got caught in.)

Before we dive into this week’s covered call idea I wanted to address several positions that expired last Friday, and how we will manage those trades …

In the middle of an earnings recession and a slowing economy, defensive stocks are probably the best places to be. These companies can maintain earnings growth while most companies are sliding and remain consistent even as the economy deteriorates further.

Defense is king right now. But defensive stocks are even better when they offer growth as well. In such uncertain times, it makes sense to bank on things that are more certain. Stocks poised in front of a megatrend are the best bet. A megatrend acts as a powerful tailwind for a stock that can make a mediocre pick very good and a good pick great.

In this issue, I highlight a defensive stock that is also one of the world’s largest producers of alternative energy. At the same time, it is also one of the best traditional regulated utilities in the country. It offers defense as well as growth and can thrive in any kind of market.

Last week was quiet, which keeps the overall evidence mostly unchanged—the indexes are hanging in there despite a rash of worrisome news, but there remain plenty of potholes and news- (and rumor-) driven action, including continued selling on strength. The question is whether Q1 reports will bring buyers out of their slumber and launch of bunch of fresh leaders higher. If so (given the hugely bearish sentiment out there), there could be tons of opportunities—but until it happens, it’s best to remain cautious. Once again we’ll leave our Market Monitor at a level 5.

This week’s list has does have a couple of recent earnings winners, and our Top Pick is one of them, gapping to new highs last week and leading what looks like a group move higher.

Stocks are doing a nice job weathering a very choppy earnings season, with mixed – though perhaps better than expected – results coming in from mega caps and the banks thus far. Today, we sidestep U.S. earnings landmines by venturing overseas to add an electric vehicle company that’s a household name in China, but perhaps less well-known here in the States. And it’s starting to give Tesla a run for its money. It’s a recent recommendation from Cabot Explorer Chief Analyst Carl Delfeld.

We locked in two winning trades this past week bringing our overall win ratio to 86.7% since introducing the service back in late May of last year.

On Wednesday I decided to go ahead and lock in a 13.64% return in our May 19, 2023, IWM iron condor. We were able to lock in over 75% of the original premium sold and with roughly 30 days left until expiration, it just didn’t make sense to hold on to the trade and the associated risk when we could simply lock in a profit and move on to the next opportunity. We were in the trade for 26 days.

We are 26 days away from the May 19, 2023, expiration cycle coming to a close and all five of our positions are in good standing. Moreover, time decay should really start to accelerate over the next two weeks, which should start to give us an opportunity to roll our positions in an attempt to collect more premium. Also, as stated in our webinar last week, I intend on adding two to three new positions over the next two weeks as we work through the heart of earnings season.

*Since we started the Income Trader service back in early June 2022, we’ve brought in a total of 68.37% in income. My hope is that we can step up our gains even further by adding as we progress through 2023.

Forty-two percent of companies that reside in the S&P 500 are due to announce this week. What does this mean for us? Well, trades, trades and more trades.


As we discussed, in great detail, in the trading platform on last Friday’s call, my plan is to focus on MSFT, V, and CAT this week. Of course, as most of us know, things can change quickly. So, as much as I am focused on the three aforementioned stocks heading into the week, there is a chance I might go with a few others or simply add to the already established list for the week. Either way, I expect it to be a fairly busy week of trading, with the possibility of having multiple trades per day.

Stocks are deep in the red today following some high-profile earnings duds—as of 1 pm ET, the Dow is down 334 points, and the Nasdaq is off 387 points.

January was the worst month for the market since March of 2020. The S&P 500 was down 5.38% and the technology-heavy Nasdaq fell 10% for the month. But stocks are recovering so far in the first week of February as earnings come to the rescue.

The first month of 2022 is in the books. And it wasn’t good. It was the worst month since March of 2020.

After a sharp pullback in January, the market has started to snap back this week. Nonetheless, I wouldn’t be surprised in the market tests new lows in February. Usually when the market is down in January, February weakness follows.

It was fun while it lasted, but it didn’t last long… That statement certainly describes gold’s recent flight-to-safety rally (and subsequent sell-off). But it could also be considered a worthy refrain for gold’s three prior lift-off attempts since last August, each of which proved to be a false breakout.

We update earnings from six recommended companies, summarize our ideas from the February Cabot Turnaround Letter, and provide comments on news from other recommended stocks. Also, check out this month’s Catalyst Report which lists important and potentially value-creating changes at undervalued companies.

Anybody that’s done a drive with kids has faced this question more times than they’d like to recall. We’re facing the same question now with respect to the market’s retreat as we look for some stability.

Stocks hopefully have settled down after facing a rough market in recent weeks fed by expectations that the Fed soon will embark on raising interest rates. This has led to sharp pullbacks for growth stocks with high valuations and no earnings. Quality and value are beating risk right now.

After a wild couple of weeks where technology stocks corrected, down 10% or more from the high, and the S&P 500 fell 10% on an intraday basis, investors nervously await the Fed this afternoon. The chairman will show us the way. He knows everything.

By some measures, Greentech looks more bearish than it has since March last year, with our benchmark Wilderhill Clean Energy Index breaking below support around 70-68.

The Fed is facing a fascinating dilemma. It needs to raise interest rates to address high inflation that seems to be persistent – especially as sharply higher housing prices (about 40% of the Consumer Price Index) work their way into the official inflation numbers. Yet, if the Fed raises rates too high or too fast, it risks a sharp decline in the stock market, a recession and higher financing costs for the federal government.

Last week, we talked about the pullback in growth stocks. This week, the pullback has expanded to all stocks. The S&P 500 has pulled back ~9% and is on the verge of a correction (defined as a 10% pullback from its recent high).

The quarter was just what we wanted see. Revenue grew by 87.9% to $29.5 million, slightly ahead of consensus for $29.1 million (which was based on S-1 filling guidance). Operating margin was roughly a percentage point above expectations (-6.8%). Full-year 2021 guidance of $103.5 - $104.3 million is ahead of consensus of $100 million and implies growth of 51% to 52% versus the 46% rate embedded in prior consensus. Given the trends, wise management team and status as a new IPO we should view this guidance as conservative.

The top five holdings in this fund are: Roper Technologies Inc (ROP, 10.71% of assets); Pentair PLC (PNR, 7.90%); Xylem Inc (XYL, 6.80%); Tetra Tech Inc (TTEK, 5.63%); and Rexnord Corp (RXN, 5.45%).

In the past 30 days, 10 analysts have increased their EPS estimates for this BDC. The shares have a current dividend yield of 8.42%, paid quarterly.

Since hitting a low in August, silver is trying to establish an intermediate-term low and could be on the cusp of another meaningful rally—especially if the market fears that inflation is truly becoming an entrenched reality (as opposed to a temporary phenomenon).

In the past 30 days, four analysts have boosted their EPS estimates for our first pick, a consumer products company that has a current annual dividend yield of 2.08%, paid quarterly. Our second recommendation is some hefty profit-taking on a previous idea.

I was recently able to speak to Laurie Sims, President at Libsyn. We had a nice conversation, and I got some good insights into the business. See my notes at the end of this update.

This investment company is expected to grow earnings at a rate of 16.7% this year. The shares have a current dividend yield of 5.65%, paid monthly.

In a recent note, analysts at RBC noted that their buy rating for this energy company was based partly on its excellent earnings per share, which were “the best since the 1Q20 print, and more than double the 59 cents reported in the year-ago quarter”, as well as it’s “reliable dividend.” The shares have a current annual dividend yield of just 8.6%, paid quarterly.

Gold broke decisively above the widely watched $1,800 level on Friday on a weaker dollar and rising geopolitical worries involving the situation in Afghanistan. As of late Friday, gold was headed for its best weekly close in almost two months.

This payments company is expected to grow its EPS by 53.76% annually over the next five years.

This logistics company beat Wall Street’s estimates by $0.63 last quarter, and 12 analysts have recently boosted their EPS projections for the company.

This industrial company beat analysts’ EPS estimates by $0.22 last quarter.

A few Cabot Options Trader subscribers have asked me about ways to protect gains in their portfolios, so I thought I would write to everyone with a couple of strategies using options to hedge your portfolio.

A subscriber recently asked me if I keep a journal of my trades. Many traders keep journals so they can look back at their trades and evaluate what they did right and what they did wrong.

Want to know how the big institutional investors use options? Here is an example of how one trader spent $132 million on three technology stocks.

Options trading has its own vernacular. To know how to do it, you need to know what every options term means. Here are some of the basics.

Our Cabot Momentum Trader’s market timing system consists of two parts—one based on the action of three select, growth-oriented market indexes, and the other based on the action of the fast-moving stocks Cabot Momentum Trader features.