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 Date | Ticker | Stock Price (open) | Stock Price (current) | Strategy | Trade | Open Price | Current Price | Delta |
| Income Wheel Portfolio - Open Trades | ||||||||
| 1/5/2023 | WFC | $42.35 | $47.58 | Covered Call | February 17, 2023 45 Call | $0.84 | $2.84 | 0.16 |
| 1/9/2023 | GDX | $31.59 | $30.32 | Selling Puts | February 17, 2023 29 Put | $0.54 | $0.32 | 0.25 |
| 1/23/2023 | KO | $60.50 | $59.83 | Selling Puts | February 17, 2023 59 Put | $0.62 | $0.68 | 0.36 |
| 1/23/2023 | BITO | $14.54 | $14.63 | Selling Puts | February 17, 2023 13.5 Put | $0.52 | $0.20 | 0.19 |
| 1/20/2023 | PFE | $45.00 | $44.06 | Covered Call | March 3, 2023 46 Call | $1.00 | $0.35 | 0.24 |
| 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% |
| Income Trades Portfolio - Closed Trades | ||||||||
| 7/26/2022 | 8/17/2022 | JPM | Short Put | September 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 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 | 54.3 | 14.4 | 68.7 |
| Proshares Bitcoin ETF | BITO | 58.7 | 5.8 | 64.8 |
| iShares MSCI Emerging Markets | EEM | 19.8 | 21.3 | 38.6 |
| iShares MSCI EAFE | EFA | 15.4 | 8 | 55.6 |
| iShares MSCI Mexico ETF | EWW | 22.3 | 16.1 | 46.7 |
| iShares MSCI Brazil | EWZ | 34.4 | 24.6 | 35.1 |
| iShares China Large-Cap | FXI | 30.6 | 10.6 | 36.4 |
| Vaneck Gold Miners | GDX | 35.0 | 6 | 31.5 |
| SPDR Gold | GLD | 14.6 | 1.8 | 30.6 |
| iShares High-Yield | HYG | 9.6 | 4.7 | 51.8 |
| SPDR Regional Bank | KRE | 22.4 | 3.6 | 80.6 |
| iShares Silver Trust | SLV | 29.6 | 9.8 | 25.7 |
| iShares 20+ Treasury Bond | TLT | 17.3 | 2.4 | 47.9 |
| United States Oil Fund | USO | 38.0 | 4.8 | 24.8 |
| Proshares Ultra VIX Short | UVXY | 103.3 | 18.5 | 36 |
| Barclays S&P 500 VIX ETN | VXX | 70.5 | 12.1 | 36.8 |
| SPDR Biotech | XLB | 19.2 | 6.1 | 49.8 |
| SPDR Energy Select | XLE | 30.1 | 15 | 31.2 |
| SPDR Financials | XLF | 18.5 | 2.7 | 69.4 |
| SPDR Utilities | XLU | 18.2 | 10.4 | 29.3 |
| SPDR Retail | XRT | 33.3 | 16.4 | 77.8 |
Stock Watchlist – Weekly Trade Ideas
| Ticker Symbol | IV | IV Rank | HPMR Oversold - Overbought | |
| Bank of America | BAC | 25.6 | 4.1 | 80 |
| Bristol-Myers | BMY | 19.5 | 8.5 | 64.3 |
| Citigroup | C | 26.2 | 5.4 | 46.7 |
| Costco | COST | 27.2 | 13 | 67.6 |
| Cisco Systems | CSCO | 29.9 | 28 | 55.1 |
| CVS Health | CVS | 26.4 | 33 | 31.8 |
| Dow Inc. | DOW | 26.1 | 2.9 | 70.6 |
| Duke Energy | DUK | 23.1 | 22.5 | 28.8 |
| Ford | F | 37.5 | 3 | 50.8 |
| Gilead Sciences | GILD | 22.8 | 12.4 | 54.7 |
| General Motors | GM | 34.6 | 5 | 73.3 |
| Intel | INTC | 36.3 | 17.6 | 64.3 |
| Johnson & Johnson | JNJ | 17.9 | 16.9 | 33.5 |
| Coca-Cola | KO | 21.3 | 29.5 | 32.4 |
| Altria Group | MO | 19.2 | 0.7 | 67.7 |
| Merck | MRK | 22.9 | 29.2 | 22.4 |
| Marvell Tech. | MRVL | 58.6 | 32.3 | 64.2 |
| Morgan Stanley | MS | 23.5 | 1.5 | 75.9 |
| Micron | MU | 55.7 | 6.9 | 60.3 |
| Oracle | ORCL | 24.4 | 9.4 | 59.8 |
| Pfizer | PFE | 22.8 | 0.9 | 34 |
| Paypal | PYPL | 22.7 | 33.5 | 69.8 |
| Starbucks | SBUX | 25.2 | 4.4 | 33.2 |
| AT&T | T | 27.3 | 7.6 | 49.7 |
| Verizon | VZ | 30.2 | 21.1 | 62 |
| Walgreens Boots Alliance | WBA | 25 | 7.6 | 53.8 |
| Wells Fargo | WFC | 25.8 | 3.2 | 82.6 |
| Walmart | WMT | 26.3 | 45.8 | 41.4 |
| Exxon-Mobil | XOM | 28.8 | 11.1 | 44.4 |
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.
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.
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.
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.
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.
The next Cabot Options Institute – Income Trader issue will be published on
February 13, 2023.
