We locked in a return of 3.9% in GDX and 3.8% in KO last week and, if all goes as planned, look to lock in even more in PFE this week. Moreover, I plan on continuing to wheel both GDX and KO, so expect to see trade alerts for both stocks as I intend on selling a few puts.
Lastly, if the market cooperates and pulls back a bit from its current short-term overbought state, I intend on adding a few short-term trades to the mix, mostly by selling puts, but we could see an appearance of a jade lizard. Stay tuned!
Current Positions
| Open Date | Ticker | Stock Price (open) | Stock Price (current) | Strategy | Trade | Open Price | Current Price | Delta | |||
| Income Wheel Portfolio - Open Trades | |||||||||||
| 11/17/2022 | BITO | $10.14 | $10.19 | Covered Call | December 30, 2022 12 Call | $0.45 | $0.26 | 0.76 | |||
| 11/17/2022 | WFC | $46.02 | $49.21 | Selling Puts | December 30, 2022 44 Put | $1.02 | $0.19 | 0.09 | |||
| 11/3/2022 | PFE | $46.44 | $47.44 | Selling Puts | December 16, 2022 45 Put | $1.08 | $0.39 | 0.21 | |||
| Income Trades Portfolio - Open Trades | |||||||||||
| 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 | Short Put | 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% | |||
| Income Trades Portfolio - Closed Trades | |||||||||||
| 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 | 56.9 | 23.3 | 45.2 |
| Proshares Bitcoin ETF | BITO | 86.9 | 20.7 | 45.1 |
| iShares MSCI Emerging Markets | EEM | 23.2 | 22.4 | 57.1 |
| iShares MSCI EAFE | EFA | 19.6 | 28.5 | 78.1 |
| iShares MSCI Mexico ETF | EWW | 24.9 | 39.2 | 68.3 |
| iShares MSCI Brazil | EWZ | 53.2 | 57.9 | 38.3 |
| iShares China Large-Cap | FXI | 41.8 | 38 | 50.5 |
| Vaneck Gold Miners | GDX | 41.5 | 30.2 | 66.6 |
| SPDR Gold | GLD | 14.8 | 0 | 61.6 |
| iShares High-Yield | HYG | 12.7 | 24.1 | 66.1 |
| SPDR Regional Bank | KRE | 25.8 | 0.2 | 60.3 |
| iShares Silver Trust | SLV | 31.4 | 22.5 | 60.3 |
| iShares 20+ Treasury Bond | TLT | 24.7 | 43.3 | 72.7 |
| United States Oil Fund | USO | 49.8 | 30.2 | 28.8 |
| Proshares Ultra VIX Short | UVXY | 96.2 | 3.4 | 17.6 |
| Barclays S&P 500 VIX ETN | VXX | 66.8 | 7 | 17.8 |
| SPDR Biotech | XLB | 23.1 | 32.7 | 75.7 |
| SPDR Energy Select | XLE | 35.7 | 32.6 | 51.5 |
| SPDR Financials | XLF | 22.3 | 3.3 | 73.7 |
| SPDR Utilities | XLU | 22.0 | 30.8 | 73.5 |
| SPDR Retail | XRT | 36.2 | 20.3 | 66.5 |
Stock Watchlist – Weekly Trade Ideas
| Ticker Symbol | IV | IV Rank | HPMR Oversold - Overbought | |
| Bank of America | BAC | 27.9 | 0.7 | 64.7 |
| Bristol-Myers | BMY | 20.0 | 8.8 | 68.9 |
| Citigroup | C | 28.9 | 0.7 | 53.3 |
| Costco | COST | 30.6 | 21.3 | 74.7 |
| Cisco Systems | CSCO | 23.3 | 11.8 | 75 |
| CVS Health | CVS | 21.3 | 6.5 | 70.3 |
| Dow Inc. | DOW | 31.0 | 23.4 | 63.7 |
| Duke Energy | DUK | 23.5 | 26 | 72.7 |
| Ford | F | 40.1 | 7.1 | 59.3 |
| Gilead Sciences | GILD | 25.5 | 20.1 | 89.6 |
| General Motors | GM | 39.1 | 6.9 | 63.1 |
| Intel | INTC | 35.8 | 32.4 | 49.9 |
| Johnson & Johnson | JNJ | 16.4 | 1.2 | 70.3 |
| Coca-Cola | KO | 16.9 | 5.5 | 79.3 |
| Altria Group | MO | 24 | 9 | 52 |
| Merck | MRK | 21.5 | 16.4 | 80.3 |
| Marvell Tech. | MRVL | 65.1 | 56.8 | 53.6 |
| Morgan Stanley | MS | 27.4 | 10 | 72.5 |
| Micron | MU | 47.4 | 18.8 | 49.9 |
| Oracle | ORCL | 37.2 | 39.6 | 84.8 |
| Pfizer | PFE | 24.4 | 7.3 | 67.4 |
| Paypal | PYPL | 46.5 | 13.3 | 37 |
| Starbucks | SBUX | 29.2 | 15.5 | 79 |
| AT&T | T | 22.8 | 11.9 | 72 |
| Verizon | VZ | 22.3 | 18.4 | 67 |
| Walgreens Boots Alliance | WBA | 27.9 | 26.7 | 71.9 |
| Wells Fargo | WFC | 27 | 2.6 | 62.9 |
| Walmart | WMT | 19.9 | 12.7 | 78.3 |
| Exxon-Mobil | XOM | 31.0 | 15.1 | 55.5 |
Weekly Trade Discussion: Open Positions
Income Wheel Portfolio: Open Positions
Covered Call: BITO December 30, 2022, 12 Calls
Original trade published on 11-17-2022 (click here to see original alert)
Current Comments: We’ve managed to sell and lock in a total of $2.63 worth of premium, or 13.6%, over four trades since introducing this position to the Income Wheel Portfolio. We were assigned the stock for $16 back on July 15, 2022, so most of our premium has come during the covered call phase of our strategy. Our current breakeven stands at 12.99.
Lastly, with BITO trading for 10.19, our December 30, 2022, 12 calls that we sold for $0.45 on 11/17 are currently worth $0.26. So far, so good.
Selling Puts: WFC December 30, 2022, 44 Puts
Original trade published on 11-17-2022 (click here to see original alert)
Current Comments: We’ve locked in $5.09 worth of premium since introducing WFC to the portfolio back in late June. Our breakeven point, or cost basis on the position, is 35.91.
Last week, with WFC trading for 46.02, we sold puts again, this time at the 44 strike. Now, with WFC trading higher at 47.44, the probability of success stands at 78.59%, and the price of our 44 puts stands at $0.43. As it stands, our position is in great shape.
Selling Puts: PFE December 16, 2022, 45 Puts
Original trade published on 11-3-2022 (click here to see original alert)
Current Comments: We’ve managed to lock in $3.62, or 7.24% worth of premium, since introducing PFE to the portfolio. Our breakeven currently stands at 46.38.
Several weeks ago, with PFE trading for 46.44 we started the wheel process over again by selling the 45 puts for $1.08. At the time, the probability of the 45 puts closing out of the money was 61.31%.
Now, with PFE trading higher at 49.21, the probability of success stands at 89.57%, and the price of our 45 puts stands at $0.15. With 18 days until expiration and only $0.15 worth of premium left in our 45 puts, there is a good chance we buy back our 45 puts, lock in our premium and immediately sell more puts this week. If so, as always, I’ll send out an alert with all the trade details.
The next Cabot Options Institute – Income Trader issue will be published on
December 5, 2022.
