The recent rally in the market has helped all our positions. If this keeps up, we should reap quite a bit of premium for the August expiration cycle.
We added JPM to our shorter-term Income Trades Portfolio and plan to add several more as we progress through earnings season. My intent is to add at least two to three more to that portfolio by the end of next week as the opportunities are plentiful currently. As I’ve stated in the past, the goal is to ladder our shorter-term trades, so we have trades expiring on a weekly basis. Of course, we are in the beginning stages of the service, with a challenging market, so I will remain patient in my selection. If Mr. Market cooperates, stay tuned for several trade alerts as we move through next week.
Cabot Options Institute – Income Trader Issue: July 29, 2022
The recent rally in the market has helped all our positions. If this keeps up, we should reap quite a bit of premium for the August expiration cycle.
We added JPM to our shorter-term Income Trades Portfolio and plan to add several more as we progress through earnings season. My intent is to add at least two to three more to that portfolio by the end of next week as the opportunities are plentiful currently. As I’ve stated in the past, the goal is to ladder our shorter-term trades, so we have trades expiring on a weekly basis. Of course, we are in the beginning stages of the service, with a challenging market, so I will remain patient in my selection. If Mr. Market cooperates, stay tuned for several trade alerts as we move through next week.
Current Positions
| Open Date | Ticker | Stock Price (open) | Stock Price (current) | Strategy | Trade | Open Price | Current Price | Delta |
| Income Wheel Portfolio - Open Trades | ||||||||
| 6/30/2022 | KO | $62.75 | $64.06 | Short Put | 8/19/22 57.5 Put | $0.70 | $0.11 | 0.05 |
| 7/11/2022 | PFE | $53.35 | $50.72 | Short Put | 8/19/22 50 Put | $1.00 | $0.94 | 0.38 |
| 7/21/2022 | WFC | $42.91 | $43.32 | Short Put | 8/19/22 39 Put | $0.46 | $0.26 | 0.12 |
| 7/18/2022 | BITO | $13.11 | $14.79 | Covered Call | 8/19/22 16 Call | $0.50 | $0.58 | 0.64 |
| 7/18/2022 | GDX | $25.59 | $26.00 | Covered Call | 8/19/22, 28 Call | $0.63 | $0.38 | 0.75 |
| Income Trades - Open | ||||||||
| 7/26/2022 | JPM | $113.76 | $114.81 | Short Put | 9/16/22 100 Put | $1.22 | $0.87 | 0.12 |
| 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 | 7/8/22 50 Put | $0.65 | $0.00 | $0.65 | 1.30% |
| 6/10/2022 | 7/15/2022 | GDX | Short Put | 7/15/22 29 Put | $0.66 | Assigned at $29 | ($2.75) | -9.48% |
| 6/10/2022 | 7/15/2022 | BITO | Short Put | 7/15/22 16 Put | $0.82 | Assigned at $16 | ($2.09) | -13.10% |
| 6/22/2022 | 7/21/2022 | WFC | Short Put | 7/29/22 35 Put | $0.80 | $0.02 | $0.78 | 2.23% |
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 |
ETF Watchlist
| Ticker Symbol | IV | IV Rank | HPMR Oversold - Overbought | |
| ARK Innovation ETF | ARKK | 60.7 | 47.6 | 54.1 |
| ProShares Bitcoin ETF | BITO | 83.1 | 31.5 | 64.7 |
| iShares MSCI Emerging Markets | EEM | 21.4 | 35.3 | 63.3 |
| iShares MSCI EAFE | EFA | 24.7 | 31.1 | 69 |
| iShares MSCI Mexico ETF | EWW | 25.2 | 31.3 | 70.5 |
| iShares MSCI Brazil | EWZ | 35.8 | 39.7 | 80.7 |
| iShares China Large-Cap | FXI | 30.6 | 17.5 | 40.5 |
| VanEck Gold Miners | GDX | 43.5 | 67.6 | 51.9 |
| SPDR Gold | GLD | 16.8 | 13.9 | 66.9 |
| iShares High-Yield | HYG | 13.6 | 45.3 | 75.7 |
| SPDR Regional Bank | KRE | 27.8 | 15.4 | 71.5 |
| iShares Silver Trust | SLV | 30.2 | 20.6 | 72 |
| iShares 20+ Treasury Bond | TLT | 19.7 | 40.6 | 61.6 |
| United States Oil Fund | USO | 46 | 32.9 | 52.8 |
| ProShares Ultra VIX Short | UVXY | 109.8 | 13.5 | 20.7 |
| Barclays S&P 500 VIX ETN | VXX | 65.7 | 8.1 | 31.2 |
| SPDR Biotech | XLB | 23.6 | 55.2 | 72.7 |
| SPDR Energy Select | XLE | 38.8 | 42.5 | 66.8 |
| SPDR Financials | XLF | 24.6 | 25.3 | 66.5 |
| SPDR Utilities | XLU | 19 | 40 | 81.1 |
| SPDR Retail | XRT | 37.5 | 79.8 | 55.9 |
Stock Watchlist
| Ticker Symbol | IV | IV Rank | HPMR Oversold - Overbought | |
| Bank of America | BAC | 38.4 | 25.8 | 57.4 |
| Bristol-Myers | BMY | 37.6 | 17.3 | 57.2 |
| Citigroup | C | 36.9 | 26.7 | 66.4 |
| Costco | COST | 31.2 | 26.7 | 68.8 |
| Cisco Systems | CSCO | 40.8 | 49.2 | 73.4 |
| CVS Health | CVS | 29.2 | 51.8 | 56.8 |
| Dow Inc. | DOW | 32.7 | 36 | 58.2 |
| Duke Energy | DUK | 28.3 | 68.8 | 67.8 |
| Ford | F | 49.7 | 33 | 80.6 |
| Gilead Sciences | GILD | 37.7 | 32.5 | 34.7 |
| General Motors | GM | 46.2 | 32.3 | 67.4 |
| Intel | INTC | 46.9 | 92.4 | 57.3 |
| Johnson & Johnson | JNJ | 27 | 28 | 52 |
| Coca-Cola | KO | 27.1 | 27.9 | 69.9 |
| Altria Group | MO | 33.2 | 48.3 | 54.6 |
| Merck | MRK | 27.9 | 24.4 | 35.8 |
| Marvell Tech. | MRVL | 54.5 | 41.3 | 65.9 |
| Morgan Stanley | MS | 40.8 | 19 | 68 |
| Micron | MU | 42.4 | 32.7 | 58.5 |
| Oracle | ORCL | 25.3 | 22 | 78.8 |
| Pfizer | PFE | 38.2 | 26.6 | 38.9 |
| PayPal | PYPL | 78 | 69.7 | 68.1 |
| Starbucks | SBUX | 42.3 | 74.2 | 70.4 |
| AT&T | T | 28.7 | 34.5 | 28.4 |
| Verizon | VZ | 25.2 | 39.1 | 28.2 |
| Walgreens Boots Alliance | WBA | 32 | 20.6 | 65.8 |
| Wells Fargo | WFC | 44.3 | 11.6 | 64.5 |
| Walmart | WMT | 32.5 | 55.5 | 55.5 |
| Exxon-Mobil | XOM | 42.6 | 47.2 | 71.7 |
Weekly Trade Discussion: Open Positions
Income Wheel Portfolio Open Positions
Selling Put: PFE August 19, 2022, 50 Puts
Original trade published on 7-11-2022 (click to see original alert)
Current Comments: At the time of the trade, PFE was trading for 53.35. We sold the August 19, 2022, 50 puts for a credit of $1.00. Our probability of success on the trade was 69.72% and the probability of touch was 58.04%.
PFE is now trading for 50.72, several dollars lower than when we first initiated the trade, but still above our 50 put strike. Our breakeven on the trade is 49.
Our probability of success stands at 58.23% and our probability of touch is 81.21%.
Put Side
Covered Call: GDX August 19, 2022, 28 Calls
Original trade published on 7-18-2022 (click here to see original alert)
Current Comments: As part of our Income Wheel Strategy, we were assigned shares of GDX at the 29 strike. GDX closed the week at 25.59, and is currently trading for 25.74. Our breakeven on the position currently stands at 27.71, so with GDX currently trading for 26 we are down slightly on the position. No worries. Like BITO, GDX offers wonderful opportunities to sell premium and we plan on continuing to take advantage of it.
Call Side
Covered Call: BITO August 19, 2022, 16 Calls
Original trade published on 7-18-2022 (click here to see original alert)
Current Comments: As part of our Income Wheel Strategy, we were assigned shares of BITO at the 16 strike. BITO closed the week at 13.11, but now stands at 14.79. Our breakeven on the position currently stands at 14.62, so we are slightly up on the position.
BITO continues to offer some excellent premium and we plan on continuing to take advantage of it. To think: BITO collapsed when we first initiated the position and we are still profitable on the position. That speaks volumes about the power of selling premium in perpetuity.
Call Side
Selling Put: WFC August 19, 2022, 39 Puts
Original trade published on 7-21-2022 (click to see original alert)
Current Comments: At the time of the trade WFC was trading for 42.91. We sold the August 19, 2022, 39 puts for a credit of $0.46. Our probability of success on the trade was 79.10% and the probability of touch was 40.44%.
WFC is now trading higher at 43.32, $4.32, or 11.1%, above our 39 put strike. Our breakeven is 38.54. Our probability of success stands at 85.64% and our probability of touch is 28.01%.
Put Side:
Selling Put: KO August 19, 2022, 57.5 Puts
Original trade published on 6-30-2022 (click to see original alert)
Current Comments: At the time of the trade KO was trading for 62.75. We sold the August 19, 2022, 57.5 puts for a credit of $0.70. Our probability of success on the trade was 77.88% and the probability of touch was 42.59%.
KO is now trading slightly higher at 64.06, well above our 57.5 put strike. Our breakeven is 56.80. Our probability of success stands at 93.50%, while our probability of touch is reading 12.79%. Our puts are currently trading at $0.11. With 21 days left until expiration and little to no time value left in our 57.5 puts, there is a good chance I buy back our puts next week, lock in some premium and immediately sell more puts in KO.
Put Side
Selling Put: JPM September 16, 2022, 100 Puts
Original trade published on 7-26-2022 (click to see original alert)
Current Comments: At the time of the trade, JPM was trading for 113.76. We sold the September 16, 2022, 100 puts for a credit of $1.22. Our probability of success on the trade was 81.72% and the probability of touch was 34.94%.
JPM is now trading for 114.81, slightly higher than when we first initiated the trade. Our breakeven on the trade is 98.78.
Our probability of success stands at 85.60% and our probability of touch is 27.78%.
Put Side
The next Cabot Options Institute – Income Trader issue will be published on August 5, 2022.
About the Analyst
Andy Crowder
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.