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Income Trader
Reliable Income From Time-Tested Strategies

Cabot Options Institute – Income Trader Issue: December 5, 2022

There really isn’t much to say at this juncture. All of our positions are in good shape at the moment and my goal, as stated last week, is to add a few short-term positions to the mix. I’ve been hesitant to add short-term positions over the past few months due to the ongoing market environment, but if we could see a slight pullback this week, I think we might just be in business for a few new trades. Here’s hoping!

Current Positions

Open DateTickerStock Price (open)Stock Price (current)StrategyTradeOpen PriceCurrent PriceDelta

Income Wheel Portfolio - Open Trades

11/17/2022BITO$10.14 $10.64 Covered CallDecember 30, 2022 12 Call$0.45 $0.23 0.74
11/17/2022WFC$46.02 $45.94 Selling PutsDecember 30, 2022 44 Put$1.02 $0.60 0.27
11/3/2022PFE$46.44 $50.91 Selling PutsDecember 16, 2022 45 Put$1.08 $0.05 0.03
11/29/2022GDX$28.03 $29.92 Selling PutsJanuary 20, 2023 26 Put$0.87 $0.42 0.16
11/29/2022KO$62.23 $64.35 Selling PutsJanuary 20, 2023 60 Put$0.84 $0.31 0.14

Income Trades Portfolio - Open Trades

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%
9/7/202210/17/2022BITOShort PutOctober 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%

Income Trades Portfolio - Closed Trades

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 ETFARKK51.822.562.1
Proshares Bitcoin ETFBITO73.712.256.2
iShares MSCI Emerging MarketsEEM23.526.374.5
iShares MSCI EAFEEFA18.723.276.5
iShares MSCI Mexico ETFEWW25.235.747.9
iShares MSCI BrazilEWZ44.447.162.2
iShares China Large-CapFXI43.145.574
Vaneck Gold MinersGDX39.64270.9
SPDR Gold GLD14.55.572.6
iShares High-YieldHYG12.027.866.2
SPDR Regional BankKRE24.10.452.3
iShares Silver TrustSLV33.736.278.7
iShares 20+ Treasury BondTLT21.140.180.7
United States Oil FundUSO42.725.150.3
Proshares Ultra VIX ShortUVXY92.47.119.8
Barclays S&P 500 VIX ETNVXX62.47.420.3
SPDR BiotechXLB23.230.573.7
SPDR Energy Select XLE32.627.844.2
SPDR FinancialsXLF22.17.957.7
SPDR UtilitiesXLU20.531.663.8
SPDR Retail XRT34.218.863

Stock Watchlist – Weekly Trade Ideas

Ticker Symbol IVIV Rank HPMR Oversold - Overbought
Bank of AmericaBAC27.57.234.7
Bristol-MyersBMY18.212.581
Citigroup C28.98.142.2
CostcoCOST32.334.728.9
Cisco SystemsCSCO22.312.175.4
CVS HealthCVS19.6472.1
Dow Inc.DOW29.220.861.8
Duke EnergyDUK23.423.761.6
FordF39.413.248.7
Gilead SciencesGILD24.729.586.3
General MotorsGM35.97.351.4
Intel INTC35.128.350.1
Johnson & JohnsonJNJ16.210.272.1
Coca-ColaKO16.18.786.3
Altria GroupMO2111.483.3
Merck MRK2120.683
Marvell Tech.MRVL48.229.257.3
Morgan StanleyMS26.99.265
MicronMU48.331.636.9
OracleORCL35.445.267.7
PfizerPFE22.78.177.7
PaypalPYPL46.119.724
StarbucksSBUX27.212.487.5
AT&TT21.38.453.3
VerizonVZ21.727.945.3
Walgreens Boots AllianceWBA28.431.563.6
Wells Fargo WFC28.710.436.5
WalmartWMT18.810.171.4
Exxon-MobilXOM30.617.739.7

Weekly Trade Discussion: Open Positions

Income Wheel Portfolio: Open Positions

Covered Call: BITO December 30, 2022, 12 Calls
Original trade published on 11-17-2022 (click here to see original alert)

Current Comments: We’ve managed to sell and lock in a total of $2.63 worth of premium, or 13.6%, over four trades since introducing this position to the Income Wheel Portfolio. We were assigned the stock for $16 back on July 15, 2022, so most of our premium has come during the covered call phase of our strategy. Our current break-even stands at 12.99.

Lastly, with BITO trading for 10.69, our December 30, 2022, 12 calls that we sold for $0.45 on 11/17 are currently worth $0.23. So far, so good.

COI_IT_120522_BITO.png

Selling Puts: WFC December 30, 2022, 44 Puts
Original trade published on 11-17-2022 (click here to see original alert)

Current Comments: We’ve locked in $5.09 worth of premium since introducing WFC to the portfolio back in late June. Our break-even point, or cost basis on the position, is 35.91.

Two weeks ago, with WFC trading for 46.09, we sold puts again, this time at the 44 strike. Now, with WFC trading higher at roughly the same price, the probability of success stands at 69.47%, and the price of our 44 puts stands at $0.60.

COI_IT_120522_WFC.png

Selling Puts: PFE December 16, 2022, 45 Puts
Original trade published on 11-3-2022 (click here to see original alert)

Current Comments: We’ve managed to lock in $3.62, or 7.24% worth of premium, since introducing PFE to the portfolio. Our break-even currently stands at 46.38.

Several weeks ago, with PFE trading for 46.44 we started the wheel process over again by selling the 45 puts for $1.08. At the time, the probability of the 45 puts closing out of the money was 61.31%.

Now, with PFE trading higher at 50.91, the probability of success stands at 96.19%, and the price of our 45 puts stands at $0.05. With 11 days until expiration and only $0.05 worth of premium left in our 45 puts, I plan to buy back our 45 puts this week, lock in our premium and immediately sell more puts. As always, I’ll send out an alert with all the trade details.

COI_IT_120522_PFE.png

Selling Puts: GDX January 20, 2022, 26 Puts
Original trade published on 11-29-2022 (click here to see original alert)

Current Comments: We recently placed the trade so there isn’t much to discuss at the moment.

Selling Puts: KO January 20, 2022, 45 Puts
Original trade published on 11-29-2022 (click here to see original alert)

Current Comments: We recently placed the trade so there isn’t much to discuss at the moment.


The next Cabot Options Institute – Income Trader issue will be published on

December 12, 2022.

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.