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Income Trader
Reliable Income From Time-Tested Strategies

Cabot Options Institute – Income Trader Issue: April 17, 2023

Weekly Commentary

Click here to register for the subscriber-exclusive event tomorrow, Wednesday, April 19 at noon Eastern Time (ET).

The message remains consistent again this week in all five of our open positions: All there is to do at the moment is allow time decay to work its magic.

All five positions are shaping up nicely as we head closer to May 19, 2023 expiration. But with earnings season upon us, as I stated last week, I expect to see several short-term positions (30 to 60 days ‘til expiration) being added to the mix. I’ve been very conservative about adding new positions to the mix and I don’t necessarily think all is clear ahead, but I do think we have an opportunity during this earnings season to add a few selective positions to the portfolio.

*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.

Current Positions

Open DateTickerStock Price (open)Stock Price (current)StrategyTradeOpen PriceCurrent PriceDelta
Income Wheel Portfolio - Open Trades
3/29/2023PFE$40.15 $41.19 Covered CallMay 19, 2023 42.5 Call$0.53 $0.57 0.33
3/29/2023KO$61.75 $63.05 Short PutMay 19, 2023 60 Put$0.76 $0.29 0.16
4/4/2023GDX$34.20 $35.09 Short PutMay 19, 2023 32 Put$0.78 $0.44 0.19
4/4/2023WFC$36.61 $39.64 Covered CallMay 19, 2023 40 Call$0.55 $1.07 0.47
3/23/2023BITO$16.89 $18.11 Short PutMay 19, 2023 15 Put$1.10 $0.28 0.14
Open DateClose DateTickerStrategyTradeOpen Price Closed PriceProfitReturn
Income Wheel Portfolio - Closed Trades
6/3/20227/8/2022PFEShort PutJuly 8, 2022 50 Put$0.65 $0.00 $0.65 1.30%
6/10/20227/15/2022GDXShort PutJuly 15, 2022 29 Put$0.66 Assigned at $29($2.75)-9.48%
6/10/20227/15/2022BITOShort PutJuly 15, 2022 16 Put$0.82 Assigned at $16($2.09)-13.10%
6/22/20227/21/2022WFCShort PutJuly 29, 2022 35 Put$0.80 $0.02 $0.78 2.23%
6/30/20228/10/2022KOShort PutAugust 19, 2022 57.5 Put$0.70 $0.03 $0.67 1.20%
7/21/20228/10/2022WFCShort PutAugust 19, 2022 39 Put$0.46 $0.04 $0.42 1.08%
7/18/20228/17/2022BITOCovered Call August 19, 2022 16 Call$0.50 $0.03 $0.47 3.59%
7/18/20228/17/2022GDXCovered Call August 19, 2022 28 Call$0.63 $0.05 $0.57 2.22%
7/11/20228/23/2022PFEShort PutAugust 19, 2022 50 Put$1.00 Assigned at $50$0.21 0.43%
8/17/20229/7/2022BITOCovered Call September 23, 2022 16.5 Call$0.55 $0.03 $0.52 4.00%
8/17/20229/7/2022GDXCovered Call September 23, 2022 28 Call$0.59 $0.07 $0.52 2.03%
8/23/20229/23/2022PFECovered Call October 21, 2022 50 Call $1.50 $0.09 $1.41 2.82%
8/10/20229/23/2022KOShort PutSeptember 23, 2022 60 Put$0.62 Assigned at $60($0.78)-1.30%
8/10/20229/23/2022WFCShort PutSeptember 23, 2022 41 Put$0.61 Assigned at $41$0.02 0.05%
9/7/202210/17/2022BITOCovered Call October 21, 2022 14 Call$0.40 $0.03 $0.37 2.60%
9/7/202210/17/2022GDXCovered Call October 21, 2022 26 Call$0.70 $0.04 $0.66 2.50%
9/26/202210/21/2022WFCCovered Call October 21, 2022 41 Call$1.30 Called away at $41$1.89 4.67%
9/26/202210/21/2022KOCovered Call October 21, 2022 60 Call$0.70 $0.00 $0.70 1.20%
9/23/20221028/2022PFECovered Call October 28, 2022 47 Call$0.56 Called away at $47$3.49 7.43%
10/17/202211/17/2022BITOCovered Call November 25, 2022 13.5 Call$0.38 $0.03 $0.35 2.60%
10/25/202211/17/2022WFCShort PutNovember 25, 2022 43 Put$0.96 $0.07 $0.89 2.00%
10/17/202211/25/2022GDXCovered Call November 25, 2022 26 Call$0.58 Called away at $26$1.09 3.87%
10/25/202211/25/2022KOCovered Call November 25, 2022 60 Call$0.80 Called away at $60$2.20 3.75%
11/3/202212/8/2022PFEShort PutDecember 16, 2022 45 Put$1.08 $0.02 $1.06 2.36%
11/17/202212/19/2022BITOCovered Call December 30, 2022 12 Call$0.45 $0.04 $0.41 3.42%
11/17/202212/30/2022WFCShort PutDecember 30, 2022 44 Put$1.02 Assigned at $44($1.37)-3.11%
11/29/20231/9/2023GDXShort PutJanuary 20, 2023 26 Put$0.87 $0.02 $0.85 3.27%
12/8/20221/13/2023PFEShort PutJanuary 13, 2023 49 Put$0.62 Assigned at $49($0.53)-1.08%
12/19/20221/20/2023BITOCovered Call January 20, 2023 11.5 Call$0.30 Called away at $11.5$1.49 14.70%
11/29/20221/20/2023KOShort PutJanuary 20, 2023 60 Put$0.84 $0.00 $0.84 1.40%
1/5/20232/17/2023WFCCovered Call February 17, 2023 45 Call$0.84 Called away at $45$4.23 10.17%
1/9/20232/17/2023GDXShort PutFebruary 17, 2023 29 Put$0.54 Assigned at $29($0.05)-0.10%
1/23/20232/17/2023KOShort PutFebruary 17, 2023 59 Put$0.62 $0.00 $0.62 1.05%
1/23/20232/17/2023BITOShort PutFebruary 17, 2023 13.5 Put$0.52 $0.00 $0.52 3.85%
1/20/20233/1/2023PFECovered Call March 3, 2023 46 Call$1.00 $0.02 $0.98 2.18%
2/22/20233/23/2023BITOShort PutMarch 31, 2023 31 Put$0.50 $0.05 $0.45 3.46%
2/22/20233/29/2023KOShort PutMarch 31, 2023 59 Put$0.86 $0.02 $0.84 1.42%
3/1/20233/29/2023PFECovered Call April 6, 2023 42 Call$0.65 $0.05 $0.60 1.43%
2/21/20233/31/2023GDXCovered Call March 31, 2023 29.5 Call$0.75 Called away at $29.5$1.84 6.48%
2/23/20233/31/2023WFCShort PutMarch 31, 2023 43 Put$0.53 Assigned at $43($4.87)-11.32%
Income Trader Portfolio
7/26/20228/17/2022JPMShort PutSeptember 16, 2022 100 Put$1.22 $0.16 $1.06 1.10%

Weekly High-Probability Mean Reversion Indicator

Here are the various levels I use to determine if an ETF is in an oversold or overbought state.

Very Overboughtgreater than or equal to 80.1
Overbought60.1 to 80.0
Neutral40.1 to 60
Oversold20.1 to 40.0
Very Oversoldless than or equal to 20.0

Each week I also include the current implied volatility (IV) and IV Rank. I look for an IV rank above 40, preferably higher.

ETF Watchlist – Weekly Trade Ideas

Ticker Symbol IVIV Rank HPMR Oversold - Overbought
ARK Innovation ETFARKK46.51.751.6
Proshares Bitcoin ETFBITO49.53.766.9
iShares MSCI Emerging MarketsEEM16.81.061.2
iShares MSCI EAFEEFA15.90.575.3
iShares MSCI Mexico ETFEWW21.91.981.1
iShares MSCI BrazilEWZ33.41.661.4
iShares China Large-CapFXI28.71.344.8
Vaneck Gold MinersGDX38.212.468.4
SPDR Gold GLD17.335.353.1
iShares High-YieldHYG10.40.863.8
SPDR Regional BankKRE42.628.437.2
iShares Silver TrustSLV31.124.270.8
iShares 20+ Treasury BondTLT17.44.936.9
United States Oil FundUSO31.73.376.5
Proshares Ultra VIX ShortUVXY105.317.822.2
Barclays S&P 500 VIX ETNVXX69.718.322.1
SPDR BiotechXLB20.89.661.9
SPDR Energy Select XLE26.10.970.8
SPDR FinancialsXLF22.014.172.1
SPDR UtilitiesXLU19.10.256.6
SPDR Retail XRT28.916.649.4

Stock Watchlist – Weekly Trade Ideas

Ticker Symbol IVIV Rank HPMR Oversold - Overbought
Bank of AmericaBAC44.037.633.4
Bristol-MyersBMY21.421.11
Citigroup C38.327.96.4
CostcoCOST23.421.60.2
Cisco SystemsCSCO21.223.59.8
CVS HealthCVS29.630.544.7
Dow Inc.DOW31.029.87.8
Duke EnergyDUK23.524.819.3
FordF48.546.120.1
Gilead SciencesGILD32.43032.7
General MotorsGM45.943.731.7
Intel INTC46.744.339.4
Johnson & JohnsonJNJ19.118.32.7
Coca-ColaKO16.516.60.6
Altria GroupMO22.221.510.7
Merck MRK24.824.329.7
Marvell Tech.MRVL51.447.93.5
Morgan StanleyMS36.831.527.8
MicronMU41.138.41
OracleORCL23.221.12.2
PfizerPFE26.126.79.4
PaypalPYPL44.546.115.4
StarbucksSBUX33.331.528
AT&TT28.227.720.1
VerizonVZ2523.718.5
Walgreens Boots AllianceWBA26.326.64.3
Wells Fargo WFC41.330.414.4
WalmartWMT18.319.34.4
Exxon-MobilXOM29.4273.5

Weekly Trade Discussion: Open Positions

Income Wheel Portfolio: Open Positions

Covered Calls: PFE May 19, 2023, 42.5 Calls
Original trade published on 3-29-2023 (click here to see original alert)

Current Comments: Several weeks ago we sold the May 19, 2023, 42.5 calls for $0.53. At the time of the alert, PFE was trading for 40.15.

Now, with PFE trading for 41.19, the probability of success stands at 69.19%, and the price of the 42.5 calls sits at $0.57. With 33 days left until expiration, all there is to do now is allow time decay to work its magic. Once we dip below 30 days, time decay begins to truly accelerate. If we have an opportunity to buy back our 42.5 calls for roughly $0.10 or less prior to two weeks before expiration we will do so and immediately sell more call premium.

Since we introduced PFE to the income wheel strategy our position has made 16.87%, while the underlying stock has fallen 22.6%.

COI_IT_041623_PFE.png

Selling Puts: BITO May 19, 2023, 15 Puts
Original trade published on 3-23-2023 (click here to see original alert)

Current Comments: We sold the May 19, 2023, 15 puts for $1.10. At the time of the alert, BITO was trading for 16.89.

Now, with BITO trading for 18.11, the probability of success stands at 81.40%, and the price of the 15 puts sits at $0.28. With 33 days left until expiration, there isn’t much to do at the moment other than to allow time decay to work its magic.

COI_IT_041623_BITO.png

Selling Puts: KO May 19, 2023, 60 Puts
Original trade published on 3-29-2023 (click here to see original alert)

Current Comments: We recently sold the May 19, 2023, 60 puts for $0.76. At the time of the alert, KO was trading for 61.75.

Now, with KO trading for 63.05, the probability of success stands at 82.75%, and the price of the 60 puts sits at $0.29. With 33 days left until expiration, there isn’t much to do other than to allow time decay to settle in.

COI_IT_041623_KO.png

Selling Puts: GDX May 19, 2023, 32 Puts
Original trade published on 4-4-2023 (click here to see original alert)

Current Comments: On April 4, 2023, we sold the May 19, 2023, 32 puts for $0.78. At the time of the alert, GDX was trading for 34.20.

Now, with GDX trading for 35.09, the probability of success stands at 77.92%, and the price of the 32 puts sits at $0.44. With 33 days left until expiration, there isn’t much to do other than to allow time decay to settle in.

COI_IT_041623_GDX.png

Covered Calls: WFC May 19, 2023, 40 Calls
Original trade published on 4-4-2023 (click here to see original alert)

Current Comments: Last week we sold the May 19, 2023, 40 calls for $0.55. At the time of the alert, WFC was trading for 36.61.

Now, with WFC trading for 39.64, the probability of success stands at 55.92%, and the price of the 40 calls sits at $1.07. Like all of our other positions, with 33 days left until expiration, all there is to do at the moment is allow time decay to work its magic.

COI_IT_041623_WFC.png

As always, if you have any questions please do not hesitate to email me at andy@cabotwealth.com.


The next Cabot Options Institute – Income Trader issue will be published on April 24, 2023.

Andy Crowder is a professional options trader, researcher and Chief Analyst of Cabot Options Institute. Formerly with Oppenheimer & Co. in New York, Andy has leveraged his investment experience to develop his statistically based options trading strategy which applies probability theory to option valuations in order to execute risk-controlled trades. This proprietary strategy has been refined through two decades of research and real-world experience and has been featured in the Wall Street Journal, Seeking Alpha, and numerous other financial publications. Andy has helped thousands of option traders learn and implement his meticulous rules-driven options trading strategies through highly attended conferences, one-on-one coaching, webinars, and his work as a financial columnist. He currently resides in Bolton Valley, Vermont and when he’s not trading, teaching and writing about options, he enjoys spending time with his wife and two daughters, backcountry skiing, biking, running and enjoying all things outdoors.