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Income Trader
Reliable Income From Time-Tested Strategies

Cabot Options Institute – Income Trader Issue: January 30, 2023

Weekly Commentary

As the February 17, 2023 expiration cycle nears we are in good shape to make some decent profits from our current positions. In fact, there is a good chance that we will have an opportunity to buy back a few of our positions this week and immediately sell more premium. Moreover, I intend on adding one to two new trades to the mix this week; of course, as always, Mr. Market will help to dictate our path.

Current Positions

Open DateTickerStock Price (open)Stock Price (current)StrategyTradeOpen PriceCurrent PriceDelta
Income Wheel Portfolio - Open Trades
1/5/2023WFC$42.35 $46.12 Covered CallFebruary 17, 2023 45 Call$0.84 $1.60 0.7
1/9/2023GDX$31.59 $32.31 Selling PutsFebruary 17, 2023 29 Put$0.54 $0.13 0.1
1/23/2023KO$60.50 $60.49 Selling PutsFebruary 17, 2023 59 Put$0.62 $0.56 0.29
1/23/2023BITO$14.54 $14.65 Selling PutsFebruary 17, 2023 13.5 Put$0.52 $0.35 0.3
1/20/2023PFE$45.00 $43.79 Covered CallMarch 3, 2023 46 Call$1.00 $0.65 0.29
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%
48.65%

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 ETFARKK48.25.179.3
Proshares Bitcoin ETFBITO61.88.283.5
iShares MSCI Emerging MarketsEEM17.85.976
iShares MSCI EAFEEFA18.05.677.5
iShares MSCI Mexico ETFEWW21.612.675
iShares MSCI BrazilEWZ37.62555.9
iShares China Large-CapFXI28.04.175.2
Vaneck Gold MinersGDX35.43.754
SPDR Gold GLD15.13.160.3
iShares High-YieldHYG9.6455.5
SPDR Regional BankKRE22.84.963.1
iShares Silver TrustSLV29.66.745
iShares 20+ Treasury BondTLT19.5852
United States Oil FundUSO36.3247.8
Proshares Ultra VIX ShortUVXY102.821.216.6
Barclays S&P 500 VIX ETNVXX70.913.418.2
SPDR BiotechXLB19.812.663.1
SPDR Energy Select XLE27.85.159.2
SPDR FinancialsXLF18.4368.8
SPDR UtilitiesXLU18.619.335.6
SPDR Retail XRT28.6574.8

Stock Watchlist – Weekly Trade Ideas

Ticker Symbol IVIV Rank HPMR Oversold - Overbought
Bank of AmericaBAC24.62.670.5
Bristol-MyersBMY21.321.145.3
Citigroup C25.21.471.7
CostcoCOST24.24.773.6
Cisco SystemsCSCO29.12662.1
CVS HealthCVS26.735.543.7
Dow Inc.DOW26.54.175.3
Duke EnergyDUK22.617.336.5
FordF43.615.169.9
Gilead SciencesGILD28.737.640.8
General MotorsGM39.218.369.9
Intel INTC35.812.737.8
Johnson & JohnsonJNJ17.28.725
Coca-ColaKO20.019.339.3
Altria GroupMO24.610.431.4
Merck MRK22.827.820.1
Marvell Tech.MRVL50.29.874.7
Morgan StanleyMS23.92.169
MicronMU37.82.684.9
OracleORCL23.59.260.9
PfizerPFE28.128.717.9
PaypalPYPL54.430.373.4
StarbucksSBUX31.727.875
AT&TT22.44.962.6
VerizonVZ22.417.954.9
Walgreens Boots AllianceWBA256.260
Wells Fargo WFC25.82.575.7
WalmartWMT26.342.253.2
Exxon-MobilXOM28.85.462

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_013023_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_013023_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_013023_PFE.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 60.49, the probability of success stands at 68.81%, and the price of the 59 puts sits at $0.56. 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_013023_KO.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 14.65, the probability of success stands at 69.55%, and the price of the 13.5 puts sits at $0.35. 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_013023_BITO.png


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

February 6, 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.