Weekly Commentary
Our BITO and KO are all due to expire this week.
I will allow our BITO calls to carry through expiration, but plan to buy back our KO puts and immediately sell more puts, thereby collecting more premium for our position in KO.
Surprisingly, if BITO does close above our 11.5 strike at expiration this week, we should see a nice overall profit in the position. I’m not sure many can say they’ve been able to scratch and claw a profit out of BITO, especially when you consider we took on the position back in early June when BITO was trading for around $18. Again, another reason why premium selling should be an integral part of everyone’s investment plan.
I’ll also be selling some more premium in PFE today. We were assigned shares last week, so now we are in the covered call phase of the Income Wheel Strategy. Look for a trade alert over the next day or two.
I also added a new trade in GDX which I will add to the “Open Positions” section below next week as we are very early in the trade.
Moreover, with earnings in full swing, expect to see trading pick up a bit as I intend to add a few new positions to the mix.
Current Positions
| Open Date | Ticker | Stock Price (open) | Stock Price (current) | Strategy | Trade | Open Price | Current Price | Delta |
| Income Wheel Portfolio - Open Trades | ||||||||
| 12/19/2022 | BITO | $10.31 | $12.38 | Covered Call | January 20, 2023 11.5 Call | $0.30 | $0.97 | 0.99 |
| 1/5/2023 | WFC | $42.35 | $44.22 | Covered Call | February 17, 2023 45 Call | $0.84 | $0.84 | 0.41 |
| 1/9/2023 | GDX | $31.59 | $32.65 | Selling Puts | February 17, 2023 29 Puts | $0.54 | $0.26 | 0.13 |
| 11/29/2022 | KO | $62.23 | $61.40 | Selling Puts | January 20, 2023 60 Put | $0.84 | $0.10 | 0.14 |
| 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 | $0.00 | ($0.53) | -1.08% |
| 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 | 48.2 | 0.2 | 77.6 |
| Proshares Bitcoin ETF | BITO | 61.1 | 10.9 | 93.7 |
| iShares MSCI Emerging Markets | EEM | 18.2 | 4 | 83.1 |
| iShares MSCI EAFE | EFA | 18.2 | 9.4 | 81.8 |
| iShares MSCI Mexico ETF | EWW | 22.2 | 0.1 | 85.1 |
| iShares MSCI Brazil | EWZ | 38.7 | 33.5 | 64.7 |
| iShares China Large-Cap | FXI | 30.2 | 6.2 | 75.5 |
| Vaneck Gold Miners | GDX | 36.6 | 16.1 | 76.1 |
| SPDR Gold | GLD | 16.1 | 9.8 | 83 |
| iShares High-Yield | HYG | 10.3 | 3.6 | 76.8 |
| SPDR Regional Bank | KRE | 22.7 | 2.5 | 66.3 |
| iShares Silver Trust | SLV | 31.8 | 20 | 64.5 |
| iShares 20+ Treasury Bond | TLT | 20.5 | 20.5 | 62.7 |
| United States Oil Fund | USO | 38.2 | 1.3 | 69.3 |
| Proshares Ultra VIX Short | UVXY | 101.5 | 12.6 | 15.3 |
| Barclays S&P 500 VIX ETN | VXX | 69.0 | 11.1 | 14.1 |
| SPDR Biotech | XLB | 20.3 | 10.6 | 77.6 |
| SPDR Energy Select | XLE | 28.2 | 4.2 | 70.1 |
| SPDR Financials | XLF | 18.4 | 7 | 79.5 |
| SPDR Utilities | XLU | 18.0 | 5.4 | 52.4 |
| SPDR Retail | XRT | 31.1 | 4.5 | 77.2 |
Stock Watchlist – Weekly Trade Ideas
| Ticker Symbol | IV | IV Rank | HPMR Oversold - Overbought | |
| Bank of America | BAC | 24.2 | 0.9 | 79.3 |
| Bristol-Myers | BMY | 22.3 | 21.6 | 50.5 |
| Citigroup | C | 26.1 | 10 | 88.9 |
| Costco | COST | 23.3 | 0.2 | 67.7 |
| Cisco Systems | CSCO | 24.3 | 11.6 | 61.6 |
| CVS Health | CVS | 26.9 | 27.8 | 30.5 |
| Dow Inc. | DOW | 30.8 | 6.4 | 90.4 |
| Duke Energy | DUK | 21.1 | 11.3 | 59.1 |
| Ford | F | 49.6 | 30 | 54.7 |
| Gilead Sciences | GILD | 29.4 | 36.9 | 50.7 |
| General Motors | GM | 40.5 | 14.2 | 53.6 |
| Intel | INTC | 47.2 | 51.5 | 79.2 |
| Johnson & Johnson | JNJ | 19.5 | 24.4 | 30.4 |
| Coca-Cola | KO | 19.6 | 15.6 | 33 |
| Altria Group | MO | 22.6 | 9.7 | 44.2 |
| Merck | MRK | 22.7 | 20.6 | 56 |
| Marvell Tech. | MRVL | 50.7 | 10.1 | 71.6 |
| Morgan Stanley | MS | 28.4 | 8.6 | 80.3 |
| Micron | MU | 40 | 2.6 | 66.2 |
| Oracle | ORCL | 22.8 | 3.8 | 89.4 |
| Pfizer | PFE | 29.1 | 24.9 | 30.8 |
| Paypal | PYPL | 53.7 | 28.8 | 76.9 |
| Starbucks | SBUX | 31.6 | 22.6 | 72.6 |
| AT&T | T | 29.9 | 43.3 | 67.4 |
| Verizon | VZ | 27.3 | 41.6 | 67 |
| Walgreens Boots Alliance | WBA | 27.3 | 10.3 | 43.3 |
| Wells Fargo | WFC | 24.7 | 8.9 | 79.9 |
| Walmart | WMT | 18.5 | 2.9 | 53.8 |
| Exxon-Mobil | XOM | 29.6 | 6.1 | 67.8 |
Weekly Trade Discussion: Open Positions
Income Wheel Portfolio: Open Positions
Covered Call: BITO January 20, 2023, 11.5 Calls
Original trade published on 12-19-2022 (click here to see original alert)
Current Comments: We’ve managed to sell and lock in a total of $3.04 worth of premium, or more than 15%, over five trades since introducing BITO 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 breakeven stands at 12.99.
With BITO trading for roughly 12.50, our January 20, 2023, 11.5 calls that we sold for $0.30 on December 19 are currently worth $0.96. I plan on holding until expiration, allowing our shares to be taken away, and immediately selling more puts next week.
Selling Puts: KO January 20, 2022, 60 Puts
Original trade published on 11-29-2022 (click here to see original alert)
Current Comments: A few weeks ago, we sold the January 20, 2023, 60 puts for $0.84.
Now, with KO trading for roughly 61.50, the probability of success stands at 86.24%, and the price of the 60 puts sits at $0.10. I plan to buy back our 60 puts and immediately sell more puts early in the week, most likely for the February 17 expiration cycle.
Covered Calls: WFC February 17, 2023, 45 Calls
Original trade published on 1-5-2023 (click here to see original alert)
Current Comments: Last week we sold the February 17, 2023, 45 calls for $0.84.
Now, with WFC trading for roughly 44, the probability of success stands at 71.15%, and the price of the 45 calls sits at $0.56. We are early 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.
The next Cabot Options Institute – Income Trader issue will be published on
January 23, 2023.
