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Income Trader
Reliable Income From Time-Tested Strategies

Cabot Options Institute – Income Trader Issue: May 1, 2023

Weekly Commentary

We are 18 days away from the May 19, 2023, expiration cycle coming to a close and the three remaining May positions all remain in good standing. Moreover, time decay continues to accelerate, which has already started to give us an opportunity to roll our positions in an attempt to collect more premium.

We locked in profits in both PFE and KO and immediately sold more premium last week and if all goes well this week, I intend to do the same with the remaining three May positions.

*Since we started the Income Trader service back in early June 2022, we’ve brought in a total of 69.14% 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
3/29/2023PFE$40.15 $38.89 Covered CallJune 16, 2023 40 Call$0.63 $0.63 0.35
3/29/2023KO$61.75 $64.15 Short PutJune 16, 2023 62.5 Call$0.70 $0.70 0.32
4/4/2023GDX$34.20 $33.58 Short PutMay 19, 2023 32 Put$0.78 $0.44 0.25
4/4/2023WFC$36.61 $39.75 Covered CallMay 19, 2023 40 Call$0.55 $0.78 0.47
3/23/2023BITO$16.89 $17.41 Short PutMay 19, 2023 15 Put$1.10 $0.26 0.15
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%
2/22/20233/29/2023KOShort PutMarch 31, 2023 59 Put$0.86 $0.02 $0.84 1.42%
3/1/20233/29/2023PFECovered Call April 6, 2023 42 Call$0.65 $0.05 $0.60 1.43%
2/21/20233/31/2023GDXCovered Call March 31, 2023 29.5 Call$0.75 Called away at $29.5$1.84 6.48%
2/23/20233/31/2023WFCShort PutMarch 31, 2023 43 Put$0.53 Assigned at $43($4.87)-11.32%
3/29/20234/28/2023KOShort PutMay 19, 2023 60 Puts$0.76 $0.08 $0.68 1.13%
3/29/20234/28/2023PFECovered Call May 19, 2023 42.5 Call$0.53 $0.05 $0.48 1.23%
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 ETFARKK41.23.333.6
Proshares Bitcoin ETFBITO53.43.256.2
iShares MSCI Emerging MarketsEEM15.81.851.9
iShares MSCI EAFEEFA16.21.362.8
iShares MSCI Mexico ETFEWW20.72.555.9
iShares MSCI BrazilEWZ30.90.565
iShares China Large-CapFXI27.40.147.6
Vaneck Gold MinersGDX33.90.845.3
SPDR Gold GLD16.122.646.2
iShares High-YieldHYG9.52.162.5
SPDR Regional BankKRE40.627.850.8
iShares Silver TrustSLV28.46.354.2
iShares 20+ Treasury BondTLT17.01.957
United States Oil FundUSO35.612.146.4
Proshares Ultra VIX ShortUVXY106.820.030.7
Barclays S&P 500 VIX ETNVXX69.117.431.7
SPDR BiotechXLB18.10.552.9
SPDR Energy Select XLE25.73.251.3
SPDR FinancialsXLF19.73.960.2
SPDR UtilitiesXLU17.27.248.4
SPDR Retail XRT26.68.544.3

Stock Watchlist – Weekly Trade Ideas

Ticker Symbol IVIV Rank HPMR Oversold - Overbought
Bank of AmericaBAC29.711.351.7
Bristol-MyersBMY20.44.620.6
Citigroup C27.97.537.2
CostcoCOST22.97.955.3
Cisco SystemsCSCO27.221.537.1
CVS HealthCVS29.440.243.5
Dow Inc.DOW26.54.348
Duke EnergyDUK23.213.753.3
FordF43.312.445
Gilead SciencesGILD25.321.834.3
General MotorsGM36.47.540
Intel INTC33.83.557.1
Johnson & JohnsonJNJ16.56.154.5
Coca-ColaKO13.11.773.1
Altria GroupMO16.51.677.3
Merck MRK19.59.659.5
Marvell Tech.MRVL49.68.251
Morgan StanleyMS25.36.659.4
MicronMU36.50.567.1
OracleORCL20.52.652
PfizerPFE24.93.226.8
PaypalPYPL42.59.660.8
StarbucksSBUX30.723.391.3
AT&TT20.3235
VerizonVZ18.84.960.2
Walgreens Boots AllianceWBA277.651.1
Wells Fargo WFC29.713.443.5
WalmartWMT22.117.856.2
Exxon-MobilXOM25.25.364.7

Weekly Trade Discussion: Open Positions

Income Wheel Portfolio: Open Positions

Covered Calls: PFE June 16, 2023 40 Call
Original trade published on 4-24-2023 (click here to see original alert)

Current Comments: We sold the June 16, 2023, 40 calls for $0.63. At the time of the alert, PFE was trading for 38.77.

Now, with PFE trading for 38.89, the probability of success stands at 65.87%, and the price of the 40 calls sits at $0.69. We are early in the trade, so with 46 days left until expiration, all there is to do now is allow time decay to work its magic.

COI_IT_043023_PFE.png

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

Current Comments: 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 16.99, the probability of success stands at 76.78%, and the price of the 15 puts sits at $0.25. With 18 days left until expiration, I intend on buying back our puts and immediately selling more put premium if we see our position hit the $0.05 to $0.10 mark. Until then we will allow time decay to continue to erode our short puts in BITO.

COI_IT_043023_BITO.png

Selling Puts: KO June 16, 2023, 62.5 Puts
Original trade published on 4-24-2023 (click here to see original alert)

Current Comments: We recently sold the June 16, 2023, 62.5 puts for $0.70. At the time of the alert, KO was trading for 63.80.

Now, with KO trading for 64.15, the probability of success stands at 69.61%, and the price of the 62.5 puts sits at $0.62. We are early in the trade, so with 46 days left until expiration, all there is to do now is allow time decay to work its magic.

COI_IT_043023_KO.png

Selling Puts: GDX May 19, 2023, 32 Puts
Original trade published on 4-4-2023 (click here to see original alert)

Current Comments: We sold the May 19, 2023, 32 puts for $0.78. At the time of the alert, GDX was trading for 34.20.

Now, with GDX trading for 33.58, the probability of success stands at 74.55%, and the price of the 32 puts sits at $0.44. With 18 days left until expiration, there isn’t much to do other than to allow the position to continue to push towards the May 19 expiration. I intend on buying back our puts and immediately selling more put premium if we see our position hit the $0.05 to $0.10 mark.

COI_IT_043023_GDX.png

Covered Calls: WFC May 19, 2023, 40 Calls
Original trade published on 4-4-2023 (click here to see original alert)

Current Comments: We sold the May 19, 2023, 40 calls for $0.55. At the time of the alert, WFC was trading for 36.61.

Now, with WFC trading for 39.75, the probability of success stands at 37.69%, and the price of the 40 calls sits at $0.78. With 18 days left until expiration, all we can do now is wait and see where WFC closes on May 19. If it closes above our short call strike of 40 we reap the premium received for the 40 call plus capital gains…and then we begin the entire wheel process over again by selling puts the following week.

COI_IT_043023_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 May 8, 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.