Weekly Commentary
Not much has changed since last week, other than that we are seven days closer to the May 19, 2023, expiration cycle coming to a close. Thankfully, our three remaining May positions all remain in good standing.
We locked in profits in both PFE and KO and immediately sold more premium just over a week ago and I will most likely do the same in our May 19, 2023 positions this week which should bring our total return to around 75%.
Current Positions
| Open Date | Ticker | Stock Price (open) | Stock Price (current) | Strategy | Trade | Open Price | Current Price | Delta |
| Income Wheel Portfolio - Open Trades | ||||||||
| 3/29/2023 | PFE | $40.15 | $38.49 | Covered Call | June 16, 2023 40 Call | $0.63 | $0.41 | 0.28 |
| 3/29/2023 | KO | $61.75 | $64.02 | Short Put | June 16, 2023 62.5 Put | $0.70 | $0.65 | 0.62 |
| 4/4/2023 | GDX | $34.20 | $35.40 | Short Put | May 19, 2023 32 Put | $0.78 | $0.10 | 0.08 |
| 4/4/2023 | WFC | $36.61 | $37.94 | Covered Call | May 19, 2023 40 Call | $0.55 | $0.28 | 0.21 |
| 3/23/2023 | BITO | $16.89 | $17.19 | Short Put | May 19, 2023 15 Put | $1.10 | $0.10 | 0.1 |
| 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% |
| 2/22/2023 | 3/29/2023 | KO | Short Put | March 31, 2023 59 Put | $0.86 | $0.02 | $0.84 | 1.42% |
| 3/1/2023 | 3/29/2023 | PFE | Covered Call | April 6, 2023 42 Call | $0.65 | $0.05 | $0.60 | 1.43% |
| 2/21/2023 | 3/31/2023 | GDX | Covered Call | March 31, 2023 29.5 Call | $0.75 | Called away at $29.5 | $1.84 | 6.48% |
| 2/23/2023 | 3/31/2023 | WFC | Short Put | March 31, 2023 43 Put | $0.53 | Assigned at $43 | ($4.87) | -11.32% |
| 3/29/2023 | 4/28/2023 | KO | Short Put | May 19, 2023 60 Puts | $0.76 | $0.08 | $0.68 | 1.13% |
| 3/29/2023 | 4/28/2023 | PFE | Covered Call | May 19, 2023 42.5 Call | $0.53 | $0.05 | $0.48 | 1.23% |
| 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 | 41.2 | 2.6 | 61.1 |
| Proshares Bitcoin ETF | BITO | 46.7 | 4.3 | 55.5 |
| iShares MSCI Emerging Markets | EEM | 16.3 | 7.6 | 61.1 |
| iShares MSCI EAFE | EFA | 16.1 | 13.1 | 64 |
| iShares MSCI Mexico ETF | EWW | 21.3 | 8.0 | 64.8 |
| iShares MSCI Brazil | EWZ | 31.5 | 8.0 | 66 |
| iShares China Large-Cap | FXI | 28.3 | 9.1 | 58.4 |
| Vaneck Gold Miners | GDX | 37.8 | 21.9 | 67.6 |
| SPDR Gold | GLD | 17 .8 | 59.5 | 54.1 |
| iShares High-Yield | HYG | 11.6 | 19.9 | 49.1 |
| SPDR Regional Bank | KRE | 62.6 | 99.0 | 37.9 |
| iShares Silver Trust | SLV | 31.7 | 38.2 | 61.7 |
| iShares 20+ Treasury Bond | TLT | 18.5 | 13.0 | 46.8 |
| United States Oil Fund | USO | 37.9 | 13.1 | 39.6 |
| Proshares Ultra VIX Short | UVXY | 111.5 | 48.4 | 42.7 |
| Barclays S&P 500 VIX ETN | VXX | 73.5 | 48.5 | 43.3 |
| SPDR Biotech | XLB | 20.1 | 13.5 | 48.8 |
| SPDR Energy Select | XLE | 28.9 | 11.1 | 37.2 |
| SPDR Financials | XLF | 23.8 | 30.0 | 47 |
| SPDR Utilities | XLU | 19.2 | 18.7 | 53.6 |
| SPDR Retail | XRT | 26.9 | 4.2 | 50.7 |
Stock Watchlist – Weekly Trade Ideas
| Ticker Symbol | IV | IV Rank | HPMR Oversold - Overbought | |
| Bank of America | BAC | 37.5 | 53.8 | 38.1 |
| Bristol-Myers | BMY | 19.8 | 5.3 | 48.7 |
| Citigroup | C | 34.7 | 44.7 | 43.8 |
| Costco | COST | 23.8 | 11.6 | 54 |
| Cisco Systems | CSCO | 28.8 | 31 | 35.8 |
| CVS Health | CVS | 26.2 | 16.9 | 38.6 |
| Dow Inc. | DOW | 28.5 | 44.2 | 53.2 |
| Duke Energy | DUK | 23.0 | 14.1 | 59.2 |
| Ford | F | 38.3 | 37.1 | 52.6 |
| Gilead Sciences | GILD | 26.9 | 2.7 | 33.2 |
| General Motors | GM | 38.4 | 35.6 | 50.5 |
| Intel | INTC | 34.7 | 41.3 | 55.3 |
| Johnson & Johnson | JNJ | 17.0 | 46.4 | 47.2 |
| Coca-Cola | KO | 14.2 | 55.2 | 60.3 |
| Altria Group | MO | 19.8 | 54.7 | 52.2 |
| Merck | MRK | 19.9 | 53.4 | 65.7 |
| Marvell Tech. | MRVL | 53.4 | 17.2 | 64.1 |
| Morgan Stanley | MS | 30.1 | 55.3 | 39.2 |
| Micron | MU | 36.5 | 48.7 | 49.4 |
| Oracle | ORCL | 20.6 | 22.5 | 74.5 |
| Pfizer | PFE | 21.5 | 13.4 | 32.2 |
| Paypal | PYPL | 47 | 50.8 | 57 |
| Starbucks | SBUX | 21.7 | 27.8 | 43.8 |
| AT&T | T | 21.7 | 21.8 | 33.5 |
| Verizon | VZ | 20.4 | 29.8 | 46.8 |
| Walgreens Boots Alliance | WBA | 30.5 | 64.6 | 27.5 |
| Wells Fargo | WFC | 38.7 | 55.7 | 38.2 |
| Walmart | WMT | 23.6 | 56.7 | 61.7 |
| Exxon-Mobil | XOM | 28.6 | 11.6 | 35.9 |
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 38.49, the probability of success stands at 73.80%, and the price of the 40 calls sits at $0.41. We are early in the trade, so with 40 days left until expiration, all there is to do now is allow time decay to work its magic.
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 17.19, the probability of success stands at 87.96%, and the price of the 15 puts sits at $0.10. I intend on buying back our puts, locking in some decent profits and immediately selling more put premium early this week.
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 64.02, the probability of success stands at 68.49%, and the price of the 62.5 puts sits at $0.65. We are early in the trade so all there is to do is to remain patient and allow time decay to do its job of eating away at our premium.
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 35.40, the probability of success stands at 91.03%, and the price of the 32 puts sits at $0.10. I intend on buying back our puts, locking in some decent profits and immediately selling more put premium early this week.
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 37.94, the probability of success stands at 80.69%, and the price of the 40 calls sits at $0.29. With 11 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. If not, well, we simply keep our call premium and immediately sell more premium for income.
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 15, 2023.
