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 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 | $40.39 | Covered Call | April 6, 2023 42 Call | $0.65 | $0.15 | 0.17 |
| 2/21/2023 | GDX | $28.41 | $31.55 | Covered Call | March 31, 2023 29.5 Call | $0.75 | $2.18 | 0.88 |
| 2/22/2023 | KO | $60.00 | $60.90 | Short Put | March 31, 2023 59 Put | $0.86 | $0.11 | 0.12 |
| 3/23/2023 | BITO | $16.89 | $17.16 | Short Put | May 19, 2023 15 Put | $1.10 | $1.05 | 0.28 |
| 2/23/2023 | WFC | $45.75 | $36.23 | Short Put | March 31, 2023 43 Put | $0.53 | $6.80 | 0.98 |
| 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% |
| 2/22/2023 | 3/23/2023 | BITO | Short Put | March 31, 2023 31 Put | $0.50 | $0.05 | $0.45 | 3.46% |
| Income Trader Portfolio | ||||||||
| 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 | 56.4 | 17.9 | 43.4 |
| Proshares Bitcoin ETF | BITO | 73.6 | 32.2 | 64 |
| iShares MSCI Emerging Markets | EEM | 20.7 | 23.9 | 59.8 |
| iShares MSCI EAFE | EFA | 23.1 | 49.2 | 49.9 |
| iShares MSCI Mexico ETF | EWW | 27.1 | 27.9 | 55.2 |
| iShares MSCI Brazil | EWZ | 36.3 | 29.1 | 34.3 |
| iShares China Large-Cap | FXI | 33.5 | 22.8 | 64.9 |
| Vaneck Gold Miners | GDX | 42.4 | 38.2 | 72.8 |
| SPDR Gold | GLD | 19.9 | 65.7 | 64.7 |
| iShares High-Yield | HYG | 13.8 | 33.5 | 46.4 |
| SPDR Regional Bank | KRE | 68.7 | 64.5 | 32.9 |
| iShares Silver Trust | SLV | 33.0 | 48.5 | 76 |
| iShares 20+ Treasury Bond | TLT | 24.1 | 45.3 | 63.9 |
| United States Oil Fund | USO | 46.7 | 42.1 | 37.5 |
| Proshares Ultra VIX Short | UVXY | 133.0 | 45.4 | 46.8 |
| Barclays S&P 500 VIX ETN | VXX | 91.5 | 44.0 | 47.6 |
| SPDR Biotech | XLB | 27.8 | 48.0 | 42.6 |
| SPDR Energy Select | XLE | 35.5 | 42.1 | 37.1 |
| SPDR Financials | XLF | 33.8 | 66.6 | 31.2 |
| SPDR Utilities | XLU | 24.3 | 43.4 | 49.7 |
| SPDR Retail | XRT | 38.1 | 23.8 | 30.5 |
Stock Watchlist – Weekly Trade Ideas
| Ticker Symbol | IV | IV Rank | HPMR Oversold - Overbought | |
| Bank of America | BAC | 56.0 | 82 | 24.9 |
| Bristol-Myers | BMY | 24.0 | 48.2 | 53.5 |
| Citigroup | C | 53.4 | 77.9 | 28.8 |
| Costco | COST | 24.4 | 6.7 | 67.5 |
| Cisco Systems | CSCO | 24.1 | 16.4 | 61.9 |
| CVS Health | CVS | 28.8 | 50.5 | 28.1 |
| Dow Inc. | DOW | 35.0 | 43.4 | 40.5 |
| Duke Energy | DUK | 26.2 | 36.1 | 48.1 |
| Ford | F | 48.0 | 36.3 | 40.2 |
| Gilead Sciences | GILD | 28.7 | 86.2 | 54.6 |
| General Motors | GM | 46.8 | 47.1 | 30.7 |
| Intel | INTC | 45.1 | 54.2 | 63.9 |
| Johnson & Johnson | JNJ | 22.0 | 52.8 | 46.5 |
| Coca-Cola | KO | 18.4 | 27.4 | 64.6 |
| Altria Group | MO | 23.8 | 34.1 | 29.1 |
| Merck | MRK | 26.5 | 73.4 | 40.5 |
| Marvell Tech. | MRVL | 56.6 | 28.9 | 50.8 |
| Morgan Stanley | MS | 46.6 | 81 | 31.5 |
| Micron | MU | 51.8 | 47.7 | 75.8 |
| Oracle | ORCL | 28.4 | 26.4 | 62.1 |
| Pfizer | PFE | 24.6 | 19.5 | 49.6 |
| Paypal | PYPL | 45.9 | 28.6 | 48.1 |
| Starbucks | SBUX | 29 | 40.9 | 34.2 |
| AT&T | T | 30.3 | 45.4 | 55.6 |
| Verizon | VZ | 26.7 | 47.7 | 55.7 |
| Walgreens Boots Alliance | WBA | 39 | 50.4 | 36.9 |
| Wells Fargo | WFC | 52.9 | 76.7 | 23.8 |
| Walmart | WMT | 21.8 | 24.3 | 64 |
| Exxon-Mobil | XOM | 35.6 | 39.6 | 41.8 |
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.
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.
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.
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.
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.
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.