Weekly Commentary
Even with some crazy volatility over the past few weeks, not much has changed. We continue to be loaded up in the Income Wheel Portfolio, although I wouldn’t mind stepping into a few new positions. As I stated last week, if I do decide to add a position or two to the portfolio, one will have a low IV and the other will be the exact opposite, with a high IV. The reason, as stated in the past, is that I like to diversify the overall beta of my positions so that our overall level of risk is balanced.
Additionally, with 32 days left until expiration, I still intend to add a jade lizard or two to the mix for the April expiration cycle. That being said, I have no problem going out to the April 28, 2023 expiration cycle (39 days to expiration) if that means we can bring in more premium.
*Since we started the Income Trader service back in early June 2022, we’ve brought in a total of 66.90% in income. My hope is that we can step up our gains even further by adding as we progress through 2023.
Current Positions
| Open Date | Ticker | Stock Price (open) | Stock Price (current) | Strategy | Trade | Open Price | Current Price | Delta |
| Income Wheel Portfolio - Open Trades | ||||||||
| 3/1/2023 | PFE | $40.50 | $40.10 | Covered Call | April 6, 2023 42 Call | $0.65 | $0.28 | 0.21 |
| 2/21/2023 | GDX | $28.41 | $30.58 | Covered Call | March 31, 2023 29.5 Call | $0.75 | $1.65 | 0.77 |
| 2/22/2023 | KO | $60.00 | $60.02 | Short Put | March 31, 2023 59 Put | $0.86 | $0.48 | 0.32 |
| 2/22/2023 | BITO | $14.75 | $16.65 | Short Put | March 31, 2023 13 Put | $0.50 | $0.09 | 0.06 |
| 2/23/2023 | WFC | $45.75 | $37.76 | Short Put | March 31, 2023 43 Put | $0.53 | $5.25 | 0.93 |
| 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% |
| 1/5/2023 | 2/17/2023 | WFC | Covered Call | February 17, 2023 45 Call | $0.84 | Called away at $45 | $4.23 | 10.17% |
| 1/9/2023 | 2/17/2023 | GDX | Short Put | February 17, 2023 29 Put | $0.54 | Assigned at $29 | ($0.05) | -0.10% |
| 1/23/2023 | 2/17/2023 | KO | Short Put | February 17, 2023 59 Put | $0.62 | $0.00 | $0.62 | 1.05% |
| 1/23/2023 | 2/17/2023 | BITO | Short Put | February 17, 2023 13.5 Put | $0.52 | $0.00 | $0.52 | 3.85% |
| 1/20/2023 | 3/1/2023 | PFE | Covered Call | March 3, 2023 46 Call | $1.00 | $0.02 | $0.98 | 2.18% |
| 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 | 59.2 | 23.5 | 51.5 |
| Proshares Bitcoin ETF | BITO | 77.3 | 22.7 | 74.2 |
| iShares MSCI Emerging Markets | EEM | 22.3 | 34.2 | 35.4 |
| iShares MSCI EAFE | EFA | 23.8 | 45.5 | 34.8 |
| iShares MSCI Mexico ETF | EWW | 29.2 | 41.7 | 34.8 |
| iShares MSCI Brazil | EWZ | 36.2 | 27.8 | 34.1 |
| iShares China Large-Cap | FXI | 34.8 | 26.9 | 36.2 |
| Vaneck Gold Miners | GDX | 41.8 | 35.5 | 37.9 |
| SPDR Gold | GLD | 22.8 | 80.9 | 77 |
| iShares High-Yield | HYG | 15.4 | 42.5 | 84 |
| SPDR Regional Bank | KRE | 78.3 | 83.9 | 41.4 |
| iShares Silver Trust | SLV | 36.5 | 75.3 | 16.9 |
| iShares 20+ Treasury Bond | TLT | 26.5 | 64.3 | 73.7 |
| United States Oil Fund | USO | 50.2 | 47.9 | 67.7 |
| Proshares Ultra VIX Short | UVXY | 155.4 | 67.7 | 16.7 |
| Barclays S&P 500 VIX ETN | VXX | 104.9 | 64.3 | 62.7 |
| SPDR Biotech | XLB | 29.5 | 62.3 | 65.2 |
| SPDR Energy Select | XLE | 39.9 | 54.9 | 22.1 |
| SPDR Financials | XLF | 40.4 | 100.3 | 22.9 |
| SPDR Utilities | XLU | 25.0 | 55.7 | 56.6 |
| SPDR Retail | XRT | 37.7 | 39.5 | 21.2 |
Stock Watchlist – Weekly Trade Ideas
| Ticker Symbol | IV | IV Rank | HPMR Oversold - Overbought | |
| Bank of America | BAC | 59.5 | 102.2 | 15.9 |
| Bristol-Myers | BMY | 25.6 | 55 | 34.5 |
| Citigroup | C | 59.2 | 98.7 | 29.5 |
| Costco | COST | 27.8 | 14.4 | 55.7 |
| Cisco Systems | CSCO | 25.7 | 15.9 | 71.5 |
| CVS Health | CVS | 30.0 | 43.3 | 14.4 |
| Dow Inc. | DOW | 38.8 | 55.2 | 15.2 |
| Duke Energy | DUK | 24.0 | 30.6 | 55.6 |
| Ford | F | 51.9 | 46.2 | 22.8 |
| Gilead Sciences | GILD | 28.4 | 61.5 | 21.5 |
| General Motors | GM | 48.7 | 53.4 | 15.2 |
| Intel | INTC | 43.5 | 41.3 | 76.3 |
| Johnson & Johnson | JNJ | 22.5 | 52 | 37.3 |
| Coca-Cola | KO | 20.6 | 29.7 | 51.9 |
| Altria Group | MO | 27.5 | 44.2 | 24.3 |
| Merck | MRK | 27.5 | 72.2 | 31 |
| Marvell Tech. | MRVL | 57.8 | 31.6 | 44.9 |
| Morgan Stanley | MS | 50.1 | 99.2 | 23.2 |
| Micron | MU | 53.1 | 54.4 | 55.8 |
| Oracle | ORCL | 29.7 | 30.6 | 45.4 |
| Pfizer | PFE | 26.2 | 13.4 | 40.7 |
| Paypal | PYPL | 45.3 | 16.3 | 38.1 |
| Starbucks | SBUX | 30.3 | 26.9 | 31.1 |
| AT&T | T | 30.4 | 47.7 | 27.8 |
| Verizon | VZ | 28.5 | 46.2 | 34 |
| Walgreens Boots Alliance | WBA | 41.1 | 55.5 | 27 |
| Wells Fargo | WFC | 58.7 | 106 | 23.6 |
| Walmart | WMT | 23.1 | 24.7 | 50.6 |
| Exxon-Mobil | XOM | 39.1 | 55.4 | 13.2 |
Weekly Trade Discussion: Open Positions
Income Wheel Portfolio: Open Positions
Covered Calls: PFE April 6, 2023, 42 Calls
Original trade published on 3-1-2023 (click here to see original alert)
Current Comments: Several weeks ago we sold the April 6, 2023, 42 calls for $0.65. At the time of the alert, PFE was trading for 40.50.
Now, with PFE trading for 40.10, the probability of success stands at 80.15%, and the price of the 42 calls sits at $0.27. If our 42 calls hit the $0.10 to $0.15 range, we will buy back our calls and immediately sell more.
Covered Calls: GDX March 31, 2023, 29.5 Calls
Original trade published on 2-21-2023 (click here to see original alert)
Current Comments: Several weeks ago we sold the March 31, 2023, 29.5 calls for $0.75. At the time of the alert, GDX was trading for 28.17.
Now, with GDX trading for 30.58, the probability of success stands at 30.63%, and the price of the 29.5 calls sits at $1.66. Not much to do at the moment other than to allow our March 31, 2023, 29.5 calls to work some magic. Like PFE, if we see our calls push lower in price, around the $0.10 to $0.15 area, I’ll buy back our calls and immediately sell more calls for income. If GDX continues to rally, no worries, we will simply allow our calls to be “called away” and reap the profits. Once that occurs, we will start the income cycle over again by selling puts in GDX.
Selling Puts: BITO March 31, 2023, 13 Puts
Original trade published on 2-22-2023 (click here to see original alert)
Current Comments: Several weeks ago we sold the March 31, 2023, 13 puts for $0.50. At the time of the alert, BITO was trading for 14.75.
Now, with BITO trading for 16.65, the probability of success stands at 91.68%, and the price of the 13 puts sits at $0.09. I will most likely buy back our 13 puts this week, lock in profits and immediately sell more put premium.
Selling Puts: KO March 31, 2023, 59 Puts
Original trade published on 2-22-2023 (click here to see original alert)
Current Comments: Several weeks ago we sold the March 31, 2023, 59 puts for $0.86. At the time of the alert, KO was trading for 60.
Now, with KO trading for 60.02, the probability of success stands at 67.76%, and the price of the 59 puts sits at $0.48. Nothing to do here other than to allow our income wheel strategy to work its magic.
Selling Puts: WFC March 31, 2023, 43 Puts
Original trade published on 2-23-2023 (click here to see original alert)
Current Comments: Several weeks ago we sold the March 31, 2023, 43 puts for $0.53. At the time of the alert, WFC was trading for 45.75.
Now, with WFC trading for 37.76, the probability of success stands at 15.46%, and the price of the 43 puts sits at $5.25. If the price of WFC closes below our 43 puts, we will follow the income cycle guidelines and allow ourselves to be assigned shares at the 43 strike.
As always, if you have any questions please do not hesitate to email me at andy@cabotwealth.com.
The next Cabot Options Institute – Income Trader issue will be published on
March 27, 2023.