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Income Trader
Reliable Income From Time-Tested Strategies

Cabot Options Institute – Income Trader Issue: March 27, 2023

Weekly Commentary

Three out of our five positions in the Income Wheel Portfolio are due to expire this week. Two out of the three positions (GDX, KO) should reap nice profits while the third position, Wells Fargo (WFC), will most likely see a loss for this expiration cycle. However, due to our strategy, we’ve built a nice 17.09% cushion to absorb any hiccups along the way, and given the near-term woes in the banking sector, I would consider the recent decline in WFC a “hiccup.” So much so, that there is a good chance we add another bank stock to the mix this week for a short-term trade.

*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 $40.39 Covered CallApril 6, 2023 42 Call$0.65 $0.15 0.17
2/21/2023GDX$28.41 $31.55 Covered CallMarch 31, 2023 29.5 Call$0.75 $2.18 0.88
2/22/2023KO$60.00 $60.90 Short PutMarch 31, 2023 59 Put$0.86 $0.11 0.12
3/23/2023BITO$16.89 $17.16 Short PutMay 19, 2023 15 Put$1.10 $1.05 0.28
2/23/2023WFC$45.75 $36.23 Short PutMarch 31, 2023 43 Put$0.53 $6.80 0.98
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%
2/22/20233/23/2023BITOShort PutMarch 31, 2023 31 Put$0.50 $0.05 $0.45 3.46%
Income Trader Portfolio
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 ETFARKK56.417.943.4
Proshares Bitcoin ETFBITO73.632.264
iShares MSCI Emerging MarketsEEM20.723.959.8
iShares MSCI EAFEEFA23.149.249.9
iShares MSCI Mexico ETFEWW27.127.955.2
iShares MSCI BrazilEWZ36.329.134.3
iShares China Large-CapFXI33.522.864.9
Vaneck Gold MinersGDX42.438.272.8
SPDR Gold GLD19.965.764.7
iShares High-YieldHYG13.833.546.4
SPDR Regional BankKRE68.764.532.9
iShares Silver TrustSLV33.048.576
iShares 20+ Treasury BondTLT24.145.363.9
United States Oil FundUSO46.742.137.5
Proshares Ultra VIX ShortUVXY133.045.446.8
Barclays S&P 500 VIX ETNVXX91.544.047.6
SPDR BiotechXLB27.848.042.6
SPDR Energy Select XLE35.542.137.1
SPDR FinancialsXLF33.866.631.2
SPDR UtilitiesXLU24.343.449.7
SPDR Retail XRT38.123.830.5

Stock Watchlist – Weekly Trade Ideas

Ticker Symbol IVIV Rank HPMR Oversold - Overbought
Bank of AmericaBAC56.08224.9
Bristol-MyersBMY24.048.253.5
Citigroup C53.477.928.8
CostcoCOST24.46.767.5
Cisco SystemsCSCO24.116.461.9
CVS HealthCVS28.850.528.1
Dow Inc.DOW35.043.440.5
Duke EnergyDUK26.236.148.1
FordF48.036.340.2
Gilead SciencesGILD28.786.254.6
General MotorsGM46.847.130.7
Intel INTC45.154.263.9
Johnson & JohnsonJNJ22.052.846.5
Coca-ColaKO18.427.464.6
Altria GroupMO23.834.129.1
Merck MRK26.573.440.5
Marvell Tech.MRVL56.628.950.8
Morgan StanleyMS46.68131.5
MicronMU51.847.775.8
OracleORCL28.426.462.1
PfizerPFE24.619.549.6
PaypalPYPL45.928.648.1
StarbucksSBUX2940.934.2
AT&TT30.345.455.6
VerizonVZ26.747.755.7
Walgreens Boots AllianceWBA3950.436.9
Wells Fargo WFC52.976.723.8
WalmartWMT21.824.364
Exxon-MobilXOM35.639.641.8

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 40.39, the probability of success stands at 83.58%, and the price of the 42 calls sits at $0.15. With 10 days left until expiration, I will most likely buy back our calls this week and immediately sell more call premium.

COI_IT_032623_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 31.55, the probability of success stands at 29.60%, and the price of the 29.5 calls sits at $2.19. Expiration is this Friday, and if GDX stays above 29.5, 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 early next week.

COI_IT_03623_GDX.png

Selling Puts: BITO May 19, 2023, 15 Puts
Original trade published on 3-23-2023 (click here to see original alert)

Current Comments: Last week we sold the May 19, 2023, 15 puts for $1.10. At the time of the alert, BITO was trading for 16.89.

Now, with BITO trading for 17.16, the probability of success stands at 61.80%, and the price of the 15 puts sits at $1.06. There isn’t much to do at the moment other than to allow time decay to work its magic.

COI_IT_032623_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 60.90, the probability of success stands at 87.43%, and the price of the 59 puts sits at $0.12. Our 59 puts are due to expire this week, and with them being essentially worthless (a good thing), there is a good chance we buy them back early and immediately sell more put premium.

COI_IT_032623_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 36.23, the probability of success stands at 14.87%, and the price of the 43 puts sits at $6.80. If the price of WFC closes below our 43 puts this week, which seems likely, we will follow the income cycle guidelines and allow ourselves to be assigned shares at the 43 strike.

COI_IT_032623_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

April 3, 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.