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Income Trader
Reliable Income From Time-Tested Strategies

Cabot Options Institute – Income Trader Issue: February 6, 2023

Weekly Commentary

We continue to be in great shape as we approach the February 17, 2023 expiration cycle.

My only hope is that we can add a few more trades to the mix this week. Earnings are coming in fast and furious and, as a result, I have my eyes on a few potential stocks that reside on our weekly watch list. Starbucks (SBUX), Citigroup (C), Cisco Systems (CSCO) and several others are just a few of the names I’ll be looking to sell puts on this week.

Current Positions

Open DateTickerStock Price (open)Stock Price (current)StrategyTradeOpen PriceCurrent PriceDelta
Income Wheel Portfolio - Open Trades
1/5/2023WFC$42.35 $47.58 Covered CallFebruary 17, 2023 45 Call$0.84 $2.84 0.16
1/9/2023GDX$31.59 $30.32 Selling PutsFebruary 17, 2023 29 Put$0.54 $0.32 0.25
1/23/2023KO$60.50 $59.83 Selling PutsFebruary 17, 2023 59 Put$0.62 $0.68 0.36
1/23/2023BITO$14.54 $14.63 Selling PutsFebruary 17, 2023 13.5 Put$0.52 $0.20 0.19
1/20/2023PFE$45.00 $44.06 Covered CallMarch 3, 2023 46 Call$1.00 $0.35 0.24
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%
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 ETFARKK54.314.468.7
Proshares Bitcoin ETFBITO58.75.864.8
iShares MSCI Emerging MarketsEEM19.821.338.6
iShares MSCI EAFEEFA15.4855.6
iShares MSCI Mexico ETFEWW22.316.146.7
iShares MSCI BrazilEWZ34.424.635.1
iShares China Large-CapFXI30.610.636.4
Vaneck Gold MinersGDX35.0631.5
SPDR Gold GLD14.61.830.6
iShares High-YieldHYG9.64.751.8
SPDR Regional BankKRE22.43.680.6
iShares Silver TrustSLV29.69.825.7
iShares 20+ Treasury BondTLT17.32.447.9
United States Oil FundUSO38.04.824.8
Proshares Ultra VIX ShortUVXY103.318.536
Barclays S&P 500 VIX ETNVXX70.512.136.8
SPDR BiotechXLB19.26.149.8
SPDR Energy Select XLE30.11531.2
SPDR FinancialsXLF18.52.769.4
SPDR UtilitiesXLU18.210.429.3
SPDR Retail XRT33.316.477.8

Stock Watchlist – Weekly Trade Ideas

Ticker Symbol IVIV Rank HPMR Oversold - Overbought
Bank of AmericaBAC25.64.180
Bristol-MyersBMY19.58.564.3
Citigroup C26.25.446.7
CostcoCOST27.21367.6
Cisco SystemsCSCO29.92855.1
CVS HealthCVS26.43331.8
Dow Inc.DOW26.12.970.6
Duke EnergyDUK23.122.528.8
FordF37.5350.8
Gilead SciencesGILD22.812.454.7
General MotorsGM34.6573.3
Intel INTC36.317.664.3
Johnson & JohnsonJNJ17.916.933.5
Coca-ColaKO21.329.532.4
Altria GroupMO19.20.767.7
Merck MRK22.929.222.4
Marvell Tech.MRVL58.632.364.2
Morgan StanleyMS23.51.575.9
MicronMU55.76.960.3
OracleORCL24.49.459.8
PfizerPFE22.80.934
PaypalPYPL22.733.569.8
StarbucksSBUX25.24.433.2
AT&TT27.37.649.7
VerizonVZ30.221.162
Walgreens Boots AllianceWBA257.653.8
Wells Fargo WFC25.83.282.6
WalmartWMT26.345.841.4
Exxon-MobilXOM28.811.144.4

Weekly Trade Discussion: Open Positions

Income Wheel Portfolio: Open Positions

Covered Calls: WFC February 17, 2023, 45 Calls
Original trade published on 1-5-2023 (click here to see original alert)

Current Comments: On January 5 we sold the February 17, 2023, 45 calls for $0.84.

Now, with WFC trading for 47.58, the probability of success stands at 17.21%, and the price of the 45 calls sits at $2.85. We have 12 days left in the expiration cycle, so there isn’t much to do at the moment other than to allow the wheel strategy to work its magic.

If WFC closes above our 45 call we will lock in capital gains plus our premium at expiration in 12 days. On the following Monday, per our income wheel guidelines, we will begin the process of selling puts in WFC.

COI_IT_020623_WFC_calls.png

Selling Puts: GDX February 17, 2023, 29 Puts
Original trade published on 1-9-2023 (click here to see original alert)

Current Comments: Two weeks ago, we sold the February 17, 2023, 29 puts for $0.54. At the time of the alert, GDX was trading for 31.59.

Now, with GDX trading for 30.32, the probability of success stands at 73.13%, and the price of the 29 puts sits at $0.32. If GDX continues to push higher and our premium manages to hit the $0.10 to $0.15 range, I will buy back our puts and immediately sell more puts in GDX.

COI_IT_020623_GDX_puts.png

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 February 17, 2023, 46 calls for $0.84. At the time of the alert, PFE was trading for 45.

Now, with PFE trading for 44.06, the probability of success stands at 77.77%, and the price of the 46 calls sits at $0.35. We have 26 days left until expiration, so there isn’t much to do at the moment, other than to allow the wheel strategy to work its magic.

COI_IT_020623_PFE_calls.png

Selling Puts: KO February 17, 2023, 59 Puts
Original trade published on 1-23-2023 (click here to see original alert)

Current Comments: Last week, we sold the February 17, 2023, 59 puts for $0.62. At the time of the alert, KO was trading for 60.50.

Now, with KO trading for 59.83, the probability of success stands at 61.96%, and the price of the 59 puts sits at $0.68. If KO pushes higher and our premium manages to hit the $0.10 to $0.15 range, I will buy back our puts and immediately sell more puts in KO.

COI_IT_020623_KO_puts.png

Selling Puts: BITO February 17, 2023, 13.5 Puts
Original trade published on 1-23-2023 (click here to see original alert)

Current Comments: Last week, we sold the February 17, 2023, 13.5 puts for $0.52. At the time of the alert, BITO was trading for 14.54.

Now, with BITO trading for 14.63, the probability of success stands at 77.29%, and the price of the 13.5 puts sits at $0.20. Like our other put trades, if BITO pushes higher and our premium manages to hit the $0.05 to $0.10 range, I will buy back our puts and immediately sell more puts in BITO.

COI_IT_020623_BITO_puts.png


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

February 13, 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.