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Income Trader
Reliable Income From Time-Tested Strategies

Cabot Options Institute – Income Trader Issue: January 23, 2023

Weekly Commentary

The week I will add new trades in both BITO and KO.

We locked in some nice gains on both trades last week which brought our total premium return to 49.75%. My hope is that we are able to add several short-term trades to the mix, in addition to the new trades in BITO and KO.

Current Positions

Open DateTickerStock Price (open)Stock Price (current)StrategyTradeOpen PriceCurrent PriceDelta
Income Wheel Portfolio - Open Trades
1/5/2023WFC$42.35 $43.80 Covered CallFebruary 17, 2023 45 Call$0.84 $0.84 0.41
1/9/2023GDX$31.59 $31.60 Selling PutsFebruary 17, 2023 29 Puts$0.54 $0.26 0.13
1/20/2023PFE$45.00 $45.00 Covered CallMarch 3, 2023 46 Call$1.00 $1.00 0.4
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 ETFARKK49.85.565.6
Proshares Bitcoin ETFBITO68.21386.9
iShares MSCI Emerging MarketsEEM19.13.877.7
iShares MSCI EAFEEFA18.36.279.1
iShares MSCI Mexico ETFEWW22.84.478
iShares MSCI BrazilEWZ38.030.755.3
iShares China Large-CapFXI30.77.870.7
Vaneck Gold MinersGDX37.36.965
SPDR Gold GLD16.310.572.3
iShares High-YieldHYG10.85.860.1
SPDR Regional BankKRE24.17.555
iShares Silver TrustSLV31.718.854.7
iShares 20+ Treasury BondTLT20.926.552.1
United States Oil FundUSO37.70.669.9
Proshares Ultra VIX ShortUVXY104.814.628.9
Barclays S&P 500 VIX ETNVXX69.412.529.6
SPDR BiotechXLB22.63261
SPDR Energy Select XLE29.17.966.2
SPDR FinancialsXLF20.71153
SPDR UtilitiesXLU20.014.834.2
SPDR Retail XRT31.21.260.6

Stock Watchlist – Weekly Trade Ideas

Ticker Symbol IVIV Rank HPMR Oversold - Overbought
Bank of AmericaBAC28.112.848.9
Bristol-MyersBMY23.429.866.8
Citigroup C28.15.580.3
CostcoCOST24.13.155.3
Cisco SystemsCSCO31.030.834.2
CVS HealthCVS28.235.416.8
Dow Inc.DOW30.62.867.4
Duke EnergyDUK23.829.330.1
FordF49.42847.5
Gilead SciencesGILD30.741.430.8
General MotorsGM42.121.240.1
Intel INTC49.257.656.7
Johnson & JohnsonJNJ21.532.816.8
Coca-ColaKO22.429.629.5
Altria GroupMO23.615.843.4
Merck MRK23.927.143.1
Marvell Tech.MRVL51.611.655.5
Morgan StanleyMS26.92.572.5
MicronMU40.11.773.2
OracleORCL23.66.958.7
PfizerPFE30.729.719.6
PaypalPYPL56.133.962.3
StarbucksSBUX32.324.953.5
AT&TT31.248.654.1
VerizonVZ30.153.641.1
Walgreens Boots AllianceWBA28.713.938.5
Wells Fargo WFC27.99.764
WalmartWMT2219.336.8
Exxon-MobilXOM30.47.663.7

Weekly Trade Discussion: Open Positions

Income Wheel Portfolio: Open Positions

Covered Call: 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 43.92, the probability of success stands at 65.98%, and the price of the 45 calls sits at $0.64. We have 25 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.

COI_IT_012323_WFC.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 32.42, the probability of success stands at 84.39%, and the price of the 29 puts sits at $0.22. 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_012323_GDX.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 45.11, the probability of success stands at 60.82%, and the price of the 46 calls sits at $1.09. 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.

COI_IT_012323_PFE.png


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

January 30, 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.