Please ensure Javascript is enabled for purposes of website accessibility
Income Trader
Reliable Income From Time-Tested Strategies

Cabot Options Institute – Income Trader Issue: March 20, 2023

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 DateTickerStock Price (open)Stock Price (current)StrategyTradeOpen PriceCurrent PriceDelta
Income Wheel Portfolio - Open Trades
3/1/2023PFE$40.50 $40.10 Covered CallApril 6, 2023 42 Call$0.65 $0.28 0.21
2/21/2023GDX$28.41 $30.58 Covered CallMarch 31, 2023 29.5 Call$0.75 $1.65 0.77
2/22/2023KO$60.00 $60.02 Short PutMarch 31, 2023 59 Put$0.86 $0.48 0.32
2/22/2023BITO$14.75 $16.65 Short PutMarch 31, 2023 13 Put$0.50 $0.09 0.06
2/23/2023WFC$45.75 $37.76 Short PutMarch 31, 2023 43 Put$0.53 $5.25 0.93
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%
1/5/20232/17/2023WFCCovered Call February 17, 2023 45 Call$0.84 Called away at $45$4.23 10.17%
1/9/20232/17/2023GDXShort PutFebruary 17, 2023 29 Put$0.54 Assigned at $29($0.05)-0.10%
1/23/20232/17/2023KOShort PutFebruary 17, 2023 59 Put$0.62 $0.00 $0.62 1.05%
1/23/20232/17/2023BITOShort PutFebruary 17, 2023 13.5 Put$0.52 $0.00 $0.52 3.85%
1/20/20233/1/2023PFECovered Call March 3, 2023 46 Call$1.00 $0.02 $0.98 2.18%
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 ETFARKK59.223.551.5
Proshares Bitcoin ETFBITO77.322.774.2
iShares MSCI Emerging MarketsEEM22.334.235.4
iShares MSCI EAFEEFA23.845.534.8
iShares MSCI Mexico ETFEWW29.241.734.8
iShares MSCI BrazilEWZ36.227.834.1
iShares China Large-CapFXI34.826.936.2
Vaneck Gold MinersGDX41.835.537.9
SPDR Gold GLD22.880.977
iShares High-YieldHYG15.442.584
SPDR Regional BankKRE78.383.941.4
iShares Silver TrustSLV36.575.316.9
iShares 20+ Treasury BondTLT26.564.373.7
United States Oil FundUSO50.247.967.7
Proshares Ultra VIX ShortUVXY155.467.716.7
Barclays S&P 500 VIX ETNVXX104.964.362.7
SPDR BiotechXLB29.562.365.2
SPDR Energy Select XLE39.954.922.1
SPDR FinancialsXLF40.4100.322.9
SPDR UtilitiesXLU25.055.756.6
SPDR Retail XRT37.739.521.2

Stock Watchlist – Weekly Trade Ideas

Ticker Symbol IVIV Rank HPMR Oversold - Overbought
Bank of AmericaBAC59.5102.215.9
Bristol-MyersBMY25.65534.5
Citigroup C59.298.729.5
CostcoCOST27.814.455.7
Cisco SystemsCSCO25.715.971.5
CVS HealthCVS30.043.314.4
Dow Inc.DOW38.855.215.2
Duke EnergyDUK24.030.655.6
FordF51.946.222.8
Gilead SciencesGILD28.461.521.5
General MotorsGM48.753.415.2
Intel INTC43.541.376.3
Johnson & JohnsonJNJ22.55237.3
Coca-ColaKO20.629.751.9
Altria GroupMO27.544.224.3
Merck MRK27.572.231
Marvell Tech.MRVL57.831.644.9
Morgan StanleyMS50.199.223.2
MicronMU53.154.455.8
OracleORCL29.730.645.4
PfizerPFE26.213.440.7
PaypalPYPL45.316.338.1
StarbucksSBUX30.326.931.1
AT&TT30.447.727.8
VerizonVZ28.546.234
Walgreens Boots AllianceWBA41.155.527
Wells Fargo WFC58.710623.6
WalmartWMT23.124.750.6
Exxon-MobilXOM39.155.413.2

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.

COI_IT_032023_PFE.png

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.

COI_IT_032023_GDX.png

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.

COI_IT_032023_BITO.png

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.

COI_IT_032023_KO.png

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.

COI_IT_032023_WFC.png

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.

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.