Our BITO 16 calls for the August 19, 2022, expiration cycle are essentially worthless. Same goes for our GDX 28 calls.
As a result, I want to buy back both our BITO and GDX calls, lock in a decent profit and immediately sell more premium in both.
ProShares Bitcoin ETF (BITO)
BITO is currently trading for 14.41.
IV: 77.04%
IV Rank: 18.5
Expected Move (Range): The expected move for the September 23, 2022, expiration cycle is from roughly 12 to 16.5.
With BITO trading for 14.41 I want to sell calls at the 16.5 strike, right at the expected move, going out 37 days for roughly $0.55, if not higher. Of course, due to a wide variety of factors, prices may and most likely will vary slightly.
Here is the trade:
Buy to close BITO August 19, 2022, 16 call for $0.03
Once that occurs (or if you are new to the trade):
Sell to open BITO September 23, 2022, 16.5 call strike for a total of $0.55 or higher. (As always, prices will vary, please adjust accordingly.)
Delta of short call: 0.31
Probability of Profit: 76.47%
Probability of Touch: 50.08%
Total net credit: $0.55
Max return (cash-secured): 3.8%
Risk Management
We use BITO as part of our Income Wheel Portfolio, so if BITO closes above our call strike at expiration our shares will be called away and we will reap the capital benefits of the stock increase, plus the premium acquired. Until that point, we will repeatedly sell calls on BITO. Of course, any necessary trade alerts/updates will follow.
VanEck Gold Miners ETF (GDX)
GDX is currently trading for 26.11.
IV: 41.2%
IV Rank: 63.1
Expected Move (Range): The expected move for the September 23, 2022, expiration cycle is from roughly 23.5 to 28.5.
With GDX trading for 26.11 I want to sell calls at the 28 strike, just below the expected move, going out 37 days for roughly $0.59, if not higher. Of course, due to a wide variety of factors, prices may and most likely will vary slightly.
Here is the trade:
Buy to close GDX August 19, 2022, 28 call for $0.05
Once that occurs (or if you are new to the trade):
Sell to open GDX September 23, 2022, 28 call for a total of $0.59 or higher. (As always, prices will vary, please adjust accordingly.)
Delta of short call: 0.30
Probability of Profit: 74.05%
Probability of Touch: 53.99%
Total net credit: $0.59
Max return (cash-secured): 2.3%
Risk Management
We use GDX as part of our Income Wheel Portfolio, so if GDX closes above our call strike at expiration our shares will be called away and we will reap the capital benefits of the stock increase, plus the premium acquired. Until that point, we will repeatedly sell calls on GDX. Of course, any necessary trade alerts/updates will follow.