Weekly Commentary
February expiration has passed and we were able to lock in 14.97% on a cumulative basis for the cycle. Three out of our four positions made a profit with GDX essentially closing out the expiration cycle at breakeven, as we only lost $0.05 on the trade.
Our cumulative total return since starting the service just over eight months ago is 64.67%.
As we enter this holiday-shortened week we once again begin the process of adding new trades in WFC, GDX, BITO and KO for the new expiration cycle. I hope to add a few additional trades including the potential for a Jade Lizard.
Current Positions
| Open Date | Ticker | Stock Price (open) | Stock Price (current) | Strategy | Trade | Open Price | Current Price | Delta |
| Income Wheel Portfolio - Open Trades | ||||||||
| 1/20/2023 | PFE | $45.00 | $43.88 | Covered Call | March 3, 2023 46 Call | $1.00 | $0.21 | 0.18 |
| Open Date | Close Date | Ticker | Strategy | Trade | Open Price | Closed Price | Profit | Return |
| Income Wheel Portfolio - Closed Trades | ||||||||
| 6/3/2022 | 7/8/2022 | PFE | Short Put | July 8, 2022 50 Put | $0.65 | $0.00 | $0.65 | 1.30% |
| 6/10/2022 | 7/15/2022 | GDX | Short Put | July 15, 2022 29 Put | $0.66 | Assigned at $29 | ($2.75) | -9.48% |
| 6/10/2022 | 7/15/2022 | BITO | Short Put | July 15, 2022 16 Put | $0.82 | Assigned at $16 | ($2.09) | -13.10% |
| 6/22/2022 | 7/21/2022 | WFC | Short Put | July 29, 2022 35 Put | $0.80 | $0.02 | $0.78 | 2.23% |
| 6/30/2022 | 8/10/2022 | KO | Short Put | August 19, 2022 57.5 Put | $0.70 | $0.03 | $0.67 | 1.20% |
| 7/21/2022 | 8/10/2022 | WFC | Short Put | August 19, 2022 39 Put | $0.46 | $0.04 | $0.42 | 1.08% |
| 7/18/2022 | 8/17/2022 | BITO | Covered Call | August 19, 2022 16 Call | $0.50 | $0.03 | $0.47 | 3.59% |
| 7/18/2022 | 8/17/2022 | GDX | Covered Call | August 19, 2022 28 Call | $0.63 | $0.05 | $0.57 | 2.22% |
| 7/11/2022 | 8/23/2022 | PFE | Short Put | August 19, 2022 50 Put | $1.00 | Assigned at $50 | $0.21 | 0.43% |
| 8/17/2022 | 9/7/2022 | BITO | Covered Call | September 23, 2022 16.5 Call | $0.55 | $0.03 | $0.52 | 4.00% |
| 8/17/2022 | 9/7/2022 | GDX | Covered Call | September 23, 2022 28 Call | $0.59 | $0.07 | $0.52 | 2.03% |
| 8/23/2022 | 9/23/2022 | PFE | Covered Call | October 21, 2022 50 Call | $1.50 | $0.09 | $1.41 | 2.82% |
| 8/10/2022 | 9/23/2022 | KO | Short Put | September 23, 2022 60 Put | $0.62 | Assigned at $60 | ($0.78) | -1.30% |
| 8/10/2022 | 9/23/2022 | WFC | Short Put | September 23, 2022 41 Put | $0.61 | Assigned at $41 | $0.02 | 0.05% |
| 9/7/2022 | 10/17/2022 | BITO | Covered Call | October 21, 2022 14 Call | $0.40 | $0.03 | $0.37 | 2.60% |
| 9/7/2022 | 10/17/2022 | GDX | Covered Call | October 21, 2022 26 Call | $0.70 | $0.04 | $0.66 | 2.50% |
| 9/26/2022 | 10/21/2022 | WFC | Covered Call | October 21, 2022 41 Call | $1.30 | Called away at $41 | $1.89 | 4.67% |
| 9/26/2022 | 10/21/2022 | KO | Covered Call | October 21, 2022 60 Call | $0.70 | $0.00 | $0.70 | 1.20% |
| 9/23/2022 | 1028/2022 | PFE | Covered Call | October 28, 2022 47 Call | $0.56 | Called away at $47 | $3.49 | 7.43% |
| 10/17/2022 | 11/17/2022 | BITO | Covered Call | November 25, 2022 13.5 Call | $0.38 | $0.03 | $0.35 | 2.60% |
| 10/25/2022 | 11/17/2022 | WFC | Short Put | November 25, 2022 43 Put | $0.96 | $0.07 | $0.89 | 2.00% |
| 10/17/2022 | 11/25/2022 | GDX | Covered Call | November 25, 2022 26 Call | $0.58 | Called away at $26 | $1.09 | 3.87% |
| 10/25/2022 | 11/25/2022 | KO | Covered Call | November 25, 2022 60 Call | $0.80 | Called away at $60 | $2.20 | 3.75% |
| 11/3/2022 | 12/8/2022 | PFE | Short Put | December 16, 2022 45 Put | $1.08 | $0.02 | $1.06 | 2.36% |
| 11/17/2022 | 12/19/2022 | BITO | Covered Call | December 30, 2022 12 Call | $0.45 | $0.04 | $0.41 | 3.42% |
| 11/17/2022 | 12/30/2022 | WFC | Short Put | December 30, 2022 44 Put | $1.02 | Assigned at $44 | ($1.37) | -3.11% |
| 11/29/2023 | 1/9/2023 | GDX | Short Put | January 20, 2023 26 Put | $0.87 | $0.02 | $0.85 | 3.27% |
| 12/8/2022 | 1/13/2023 | PFE | Short Put | January 13, 2023 49 Put | $0.62 | Assigned at $49 | ($0.53) | -1.08% |
| 12/19/2022 | 1/20/2023 | BITO | Covered Call | January 20, 2023 11.5 Call | $0.30 | Called away at $11.5 | $1.49 | 14.70% |
| 11/29/2022 | 1/20/2023 | KO | Short Put | January 20, 2023 60 Put | $0.84 | $0.00 | $0.84 | 1.40% |
| 1/5/2023 | 2/17/2023 | WFC | Covered Call | February 17, 2023 45 Call | $0.84 | Called away at $45 | $4.23 | 10.17% |
| 1/9/2023 | 2/17/2023 | GDX | Short Put | February 17, 2023 29 Put | $0.54 | Assigned at $29 | ($0.05) | -0.10% |
| 1/23/2023 | 2/17/2023 | KO | Short Put | February 17, 2023 59 Put | $0.62 | $0.00 | $0.62 | 1.05% |
| 1/23/2023 | 2/17/2023 | BITO | Short Put | February 17, 2023 13.5 Put | $0.52 | $0.00 | $0.52 | 3.85% |
| 7/26/2022 | 8/17/2022 | JPM | Short Put | September 16, 2022 100 Put | $1.22 | $0.16 | $1.06 | 1.10% |
| 63.62% | ||||||||
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 Overbought | greater than or equal to 80.1 |
| Overbought | 60.1 to 80.0 |
| Neutral | 40.1 to 60 |
| Oversold | 20.1 to 40.0 |
| Very Oversold | less 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 | IV | IV Rank | HPMR Oversold - Overbought | |
| ARK Innovation ETF | ARKK | 57.5 | 20.7 | 55.7 |
| Proshares Bitcoin ETF | BITO | 69.4 | 17.6 | 75.5 |
| iShares MSCI Emerging Markets | EEM | 19.8 | 4.3 | 27.1 |
| iShares MSCI EAFE | EFA | 16.5 | 13 | 48.5 |
| iShares MSCI Mexico ETF | EWW | 34.6 | 21.2 | 73.3 |
| iShares MSCI Brazil | EWZ | 32.8 | 13.9 | 50.5 |
| iShares China Large-Cap | FXI | 35.9 | 9.9 | 29.1 |
| Vaneck Gold Miners | GDX | 14.7 | 2 | 18.4 |
| SPDR Gold | GLD | 11.8 | 22.5 | 30.2 |
| iShares High-Yield | HYG | 23.8 | 7.5 | 33.3 |
| SPDR Regional Bank | KRE | 28.1 | 2.5 | 51.4 |
| iShares Silver Trust | SLV | 18.6 | 11.6 | 30.2 |
| iShares 20+ Treasury Bond | TLT | 36.9 | 4.2 | 33 |
| United States Oil Fund | USO | 108.5 | 23.7 | 38.5 |
| Proshares Ultra VIX Short | UVXY | 73.4 | 15.8 | 51.8 |
| Barclays S&P 500 VIX ETN | VXX | 20.3 | 17.9 | 51.6 |
| SPDR Biotech | XLB | 30.6 | 15.1 | 34.9 |
| SPDR Energy Select | XLE | 19.4 | 8.2 | 29.7 |
| SPDR Financials | XLF | 18.7 | 6.5 | 45.6 |
| SPDR Utilities | XLU | 33.2 | 18.2 | 53.7 |
| SPDR Retail | XRT | 21.8 | 8.6 | 56 |
Stock Watchlist – Weekly Trade Ideas
| Ticker Symbol | IV | IV Rank | HPMR Oversold - Overbought | |
| Bank of America | BAC | 25.8 | 6.2 | 40.9 |
| Bristol-Myers | BMY | 21.7 | 19.4 | 38 |
| Citigroup | C | 26.8 | 5.1 | 55 |
| Costco | COST | 28.1 | 15.3 | 53.2 |
| Cisco Systems | CSCO | 23.1 | 4.8 | 74.5 |
| CVS Health | CVS | 20.7 | 0.3 | 53.2 |
| Dow Inc. | DOW | 26.8 | 2.3 | 34.8 |
| Duke Energy | DUK | 20.8 | 12.2 | 46.3 |
| Ford | F | 39.8 | 8.6 | 43.2 |
| Gilead Sciences | GILD | 24.5 | 14.1 | 47.8 |
| General Motors | GM | 33.5 | 3.6 | 82.2 |
| Intel | INTC | 36.7 | 19.8 | 36.2 |
| Johnson & Johnson | JNJ | 17.9 | 14.3 | 37.7 |
| Coca-Cola | KO | 18.2 | 3.2 | 52 |
| Altria Group | MO | 20.5 | 8.3 | 69.2 |
| Merck | MRK | 22.2 | 14.3 | 61.6 |
| Marvell Tech. | MRVL | 62 | 39.3 | 43 |
| Morgan Stanley | MS | 24.9 | 5.5 | 57.6 |
| Micron | MU | 41.6 | 12.3 | 38.7 |
| Oracle | ORCL | 33.8 | 36.9 | 41.7 |
| Pfizer | PFE | 24.4 | 2.6 | 36.7 |
| Paypal | PYPL | 41.8 | 3.3 | 29.8 |
| Starbucks | SBUX | 25.4 | 7.5 | 47.7 |
| AT&T | T | 24.2 | 12.5 | 53.2 |
| Verizon | VZ | 21.7 | 13.8 | 45 |
| Walgreens Boots Alliance | WBA | 27.1 | 10.5 | 52.3 |
| Wells Fargo | WFC | 25.8 | 4.3 | 52.2 |
| Walmart | WMT | 28 | 48.7 | 62.9 |
| Exxon-Mobil | XOM | 29.7 | 11 | 34.8 |
Weekly Trade Discussion: Open Positions
Income Wheel Portfolio: Open Positions
Covered Calls: PFE March 3, 2023, 46 Calls
Original trade published on 1-20-2023 (click here to see original alert)
Current Comments: Last week we sold the March 3, 2023, 46 calls for $0.84. At the time of the alert, PFE was trading for 45.
Now, with PFE trading for 43.21, the probability of success stands at 94.32%, and the price of the 46 calls sits at $0.05. With 11 days left until expiration (March 3, 2023) it doesn’t make sense to continue to hold on to the trade. As a result, I plan on buying back our March 3, 2023, 46 calls, locking in a nice profit and immediately selling more premium.
The next Cabot Options Institute – Income Trader issue will be published on
February 27, 2023.
