I plan on locking in returns on several of our current positions and immediately selling more premium. In addition, I plan to add at least one more stock to the portfolio, which will bring our total to seven stocks. I also intend on continuing to ladder our positions in perpetuity, so we are collecting premium on a weekly basis. As it stands, we have positions due to expire over the next four consecutive weeks.

Other than that, there really isn’t much to say at the moment. We continue to be pleased with the overall mechanics of our approach and more importantly the overall return, which currently stands at 145.7%.

Earnings season is mostly behind us, but there are a few stragglers yet to report on the calendar. Target is on the agenda this week. With a decent IV rank (58.9) and the ability to create a fairly large range outside of the established expected range, Target (TGT) looks like a potential trading opportunity.

The company is due to report prior to the opening bell Tuesday, so if we decide to place a trade look for an alert around mid-day today.

You may have noticed that last week when Nvidia (NDVA) announced its earnings, its stock rose 16% while Explorer recommendation Super Micro Computer (SMCI) went up 32%.

This is consistent with my view that Super Micro is a leveraged bet on artificial intelligence (AI), and I expect this will also be the case when Nvidia’s stock price moves the other way. Nvidia is now priced at an incredible 32 times trailing annual sales and has a larger market cap than Germany’s entire blue-chip DAX index. Super Micro has already tripled in 2024 so consider taking partial profits. Remember, J.P. Morgan allegedly stated that he made his greatest profits by selling too soon.

In my last update on February 14, I suggested cannabis stocks had fallen enough to be buyable ahead of the expected rescheduling catalyst. That was an opportune entry point.

As of the close February 23, the AdvisorShares Pure U.S. Cannabis (MSOS) and the leveraged version, AdvisorShares MSOS 2X Daily (MSOX), were up 12% and 20%, respectively.

Then investors got impatient again with the lack of progress on catalysts. As of the close February 27, 2024, volatile cannabis stocks had given back most of these gains. The MSOS was up 2.4% and the MSOX was up 1.7%. I think cannabis stocks have weakened enough to consider adding again (more on this below).

The Goldilocks scenario of falling inflation and a still-strong economy is unlikely to last. Interest rates will have to come down before long or the recession that the market is dismissing might be just a little further down the road. But recent higher-than-expected inflation is making lower rates less likely.

Sure, the rally could last for a while. The economy always seems to be more resilient than people expect. But the circumstances behind the rally since October are unlikely to last. This environment will change. For that reason, it doesn’t make sense to chase stocks that have been working so far this year. It’s better to position ahead of a new dynamic that is likely coming.

Change creates opportunity. There are many great income stocks that are not benefiting from this rally. Yet these stocks are selling at historically very cheap valuations with high yields. These stocks also can thrive in a slowing economy. In this issue, I highlight two stocks in particular that are cheap and high-yielding ahead of a period of likely market outperformance.

Despite some heavy selling pressures early last week, the market rallied to close the week following Nvidia’s (NVDA) blowout earnings report that highlighted the growth potential of AI. By week’s end the S&P 500 had gained 1.2%, while the Dow rose marginally and the Nasdaq fell slightly.

One tool that we’ve long used is, after a big move (either up or down), if the market starts to get very volatile, it’s often a sign that the buyers and sellers are fighting it out—and could lead to a character change. That said, we’re mentioning that more as a heads up than as any major red flag—at day’s end, the trends of the major indexes and most leading stocks are up, and it’s possible that Nvidia’s (NVDA) quarterly report cleared the air last week. All told, we’re bullish but we also think the odds favor more tricky trading going ahead. We’ll leave our Market Monitor at a level 7 while keeping a close eye on the post-NVDA action.

This week’s list has some tech leaders, but it also has more than a few names outside of the AI field, both smaller and larger. For our Top Pick, we’re going with a liquid leader where we think investor perception has a lot farther to run on the upside.

The market is hitting new highs, thanks to Nvidia (NVDA). And while blowout earnings from the artificial intelligence leader were good for the many AI-related plays we have in the Stock of the Week portfolio, we have more than our share of non-AI stocks that are thriving as well (see American Eagle Outfitters (AEO) and Aviva (AVVIY)). Today, however, we add a hiding-in-plain-sight all-star, a company so mainstream and obvious that it may already be in your portfolio … or it’s possible you sold out of it along with many other institutional investors during a brutal stretch in 2022. Now, it’s fully back – and yet the shares still trade well below their 2021 peak. It’s a new recommendation from Tyler Laundon in his Cabot Early Opportunities advisory.

Details inside.

We finally locked in a profit last week in our QQQ bear call spread … and it looked like a similar fate was not far off for our SPY iron condor. That is until NVDA reported earnings and the market rocketed higher shortly after the announcement. The push higher in the S&P 500 led to SPY piercing our short call strike of 505. The spread is now worth $2.87. Given the near-term overbought readings and numerous short-term bearish indicators flashing red, I will continue to hold the position, but plan to exit if our spread hits $3.16.

I’ll be adding several more positions to the mix this week. Stay tuned!

We are on the downside of earnings season, but there are still a few opportunities ahead. Early this week, Lowe’s (LOW) is due to announce earnings. Per usual, I’ve gone over an example in the “Trade Ideas” section and this week I’ve highlighted Lowe’s. The stock is coming into earnings with a decent IV rank (49.8) and an opportunity to create a fairly wide range around the expected move for the stock (224-241) while maintaining a nice premium. Moreover, the premium is decent enough to where we have the ability to widen the range even more while again bringing in a decent premium.

After we locked in a 17.1% gain in DKNG two weeks ago, we managed to lock in a fairly pedestrian 1.1% in XLU and 1.1% in KO.

The recent gains in XLU and KO, however, pushed our total return to all-time highs and a not-so-pedestrian 145.65%. I plan to continue our wheel-based approach in both XLU and KO early this week and plan to add a new ticker to the portfolio as well. Stay tuned!

Despite some heavy selling pressures early in the week, the market rallied to close the week following Nvidia’s (NVDA) blowout earnings report that highlighted the growth potential of AI. By week’s end the S&P 500 had gained 1.2%, while the Dow rose marginally and the Nasdaq fell slightly.

Yesterday the FOMC decided to move ahead with another 25bps hike, bringing its federal funds target rate to a range of 4.75% to 5%. The statement was missing the phrase, “...ongoing increases in rates would be appropriate,” which was present in the eight previous statements, suggesting the Fed may be done hiking soon.

Fallout from the bank failures and the Fed meeting tomorrow make this a big week in the market.

Let’s deal with the banks first. After the two bank failures this week and the buyout of ailing Credit Suisse (CS) over the weekend, the spotlight is on potentially vulnerable small regional banks. Although Silicon Valley Bank and Credit Suisse are very different banks with different problems, the common denominator is the markets, particularly the bond market.

This week, all everyone cares about is the banking system, and so I’ve been thinking about it a lot. I continue to believe that this banking crisis is manageable and NOT systemic. Here’s how I see it…

Last Thursday evening, I was a guest at a friend’s regular poker game. It seemed friendly enough – the regulars were average players (like myself), pleasant to spend time with (no jerks), and the evening included a tasty dinner. Also, favorably to me as the newbie, the stakes were modest.

The games were straightforward: 5-card draw, 7-card stud high-low, while a few others included a small field of common cards similar to Texas Hold’em. Betting was reasonable, with limits on both the size and number of raises. So far, so good.

This is a big week in the market. Investors are grappling with the fallout from the banking crisis and the Fed meeting later this week.


The failure of two banks last week also turns a spotlight on the vulnerabilities of smaller regional banks. The situation so far has not caused major reverberations in the market, as the government backstopped the fallout so far. But the situation might not be over. There could be more bank failures and ugly days for the market ahead.

This week, we comment on the full earnings report from Volkswagen, which wraps up this earnings season. Walgreens Boots Alliance (WBA) is an off-cycle company and reports on March 28.

Cabot Options Institute Quant Trader is focused exclusively on creating consistent returns using high-probability options strategies including bear call spreads, bull put spreads, iron condors and more. Whether you have questions about the strategies, or even about setting up your account, or how to make your own trades, Andy will answer all of your questions

The big news of the week is, of course, rising risks in the financial system following the failures of several smaller regional banks in the U.S. as well as instability in some larger institutions abroad, mainly Credit Suisse (CS). We also received February inflation data in the form of CPI (Tuesday) and PPI (Wednesday), which continue to show that inflation is moderating but isn’t collapsing. The February PPI report showed a 0.1% decline versus estimates for a 0.3% increase.

This was a week to remember. The Explorer does not have any financial stocks, thankfully, though a couple of our small-cap ideas did not have a good week. Federal deposit insurance was introduced 90 years ago during the Great Depression. Ever since then, small depositors within the FDIC limit of coverage have escaped the fear of a bank failure.

Cabot Options Institute Income Trader is focused exclusively on the creating consistent income through a variety of options selling strategies. Whether you have questions about selling puts, covered strangles, jade lizards or our income wheel approach, Andy is more than happy to help you steepen your learning curve in this live event.

WHAT TO DO NOW: After cracking on an intermediate-term basis last week, the market has been unable to find its footing this week despite some steps to secure the banking system. It’s not 2008 out there, and in fact, many growth stocks we own and are watching are still holding up well, but there’s no doubt the selling pressures out there are intense and haven’t let up. Tonight, we’re going to sell one-third of what’s left of our ProShares S&P Fund (SSO) position and our half position in Las Vegas Sands (LVS), which will leave us a cash position of around 66%.

After moving higher in January, stocks fell back again in February. After falling last week, stocks are sharply higher this week. Why can’t the market seem to make up its mind?


The main catalyst for the market so far this year is the perception of the inflation/Fed situation. When investors sense inflation falling and the Fed is almost done hiking rates, stocks rally. When they believe inflation is remaining sticky and the Fed will have to remain aggressive for a lot longer, stocks fall. This dynamic has been on full display in the last few trading days.

Snowflake (SNOW) reported late last week that Q3 revenue rose 67% to $557 million (beating by $18.1 million) while adjusted diluted EPS of $0.11 beat by $0.06.

Cannabis stocks are screaming higher this morning. Our AdvisorShares Pure US Cannabis (MSOS) ETF is up over 8%. Three of our portfolio names are up even more, 9% to 15%.

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.

Okay, it’s time to ramp things back up again. I want to sell premium for the January expiration cycle and I’m going to start with a bear call spread and hopefully, over the next few trading days, add an iron condor and bull put spread in a few other of the major index ETFs.

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 got into CrowdStrike (CRWD) back in 2019 almost near the stock’s lowest publicly traded price (below 50).

As part of the Income Wheel approach, we allowed our GDX calls to expire in the money at expiration last week. As a result, our shares were “called” away at the price of 26, and we locked in 3.87% on the trade.

With 18 days left until expiration and our IWM iron condor worth $0.24, I want to go ahead and lock in some nice profits. We sold the iron condor for $0.75 just 13 days ago and are now able to lock in over 10% on the trade. If you choose to hold on to the trade, please be aware of the risks.

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.

Moving Shell plc (SHEL) from Buy to Sell

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.

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.