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Income Trader
Reliable Income From Time-Tested Strategies

Cabot Options Institute – Income Trader Issue: October 31, 2022

This week I intend on adding several new positions to the mix. My hope is to add two new positions to the “Wheel” portfolio and two short-term, one-off trades.




Also, with PFE closing in the money, or above our 47 calls at expiration, we will need to sell some puts early in the week to start a new phase of the wheeling process. Our shares were called away at $47. 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.

This week I intend on adding several new positions to the mix. My hope is to add two new positions to the “Wheel” portfolio and two short-term, one-off trades.

Also, with PFE closing in the money, or above our 47 calls at expiration, we will need to sell some puts early in the week to start a new phase of the wheeling process. Our shares were called away at $47. 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.

Nothing new here. We simply continue to sell premium on a diversified group of mostly low-beta stocks to collect a steady stream of premium. By doing so, we maintain a smooth equity curve rather than experience the highs and lows of the current, highly volatile market. And the performance, during what has been a challenging market for most, clearly shows the benefits of having some exposure to a diversified group of options strategies.

Current Positions

Open DateTickerStock Price (open)Stock Price (current)StrategyTradeOpen PriceCurrent PriceDelta
Income Wheel Portfolio – Open Trades
10/17/2022BITO$12.01$12.77Covered CallNovember 25, 2022 13.5 Call$0.38$0.470.61
10/17/2022GDX$23.57$24.64Covered CallNovember 25, 2022 26 Call$0.58$0.680.64
10/25/2022KO$58.30$60.71Covered CallNovember 25, 2022 60 Call$0.80$1.860.41
10/25/2022WFC$45.43$46.46Selling PutsNovember 25, 2022 43 Puts$0.96$0.570.21
Income Trades Portfolio – Open Trades
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$0.651.30%
6/10/20227/15/2022GDXShort PutJuly 15, 2022 29 Put$0.66Assigned at $29($2.75)-9.48%
6/10/20227/15/2022BITOShort PutJuly 15, 2022 16 Put$0.82Assigned at $16($2.09)-13.10%
6/22/20227/21/2022WFCShort PutJuly 29, 2022 35 Put$0.80$0.02$0.782.23%
6/30/20228/10/2022KOShort PutAugust 19, 2022 57.5 Put$0.70$0.03$0.671.20%
7/21/20228/10/2022WFCShort PutAugust 19, 2022 39 Put$0.46$0.04$0.421.08%
7/18/20228/17/2022BITOCovered CallAugust 19, 2022 16 Call$0.50$0.03$0.473.59%
7/18/20228/17/2022GDXCovered CallAugust 19, 2022 28 Call$0.63$0.05$0.572.22%
7/11/20228/23/2022PFEShort PutAugust 19, 2022 50 Put$1.00Assigned at $50$0.210.43%
8/17/20229/7/2022BITOCovered CallSeptember 23, 2022 16.5 Call$0.55$0.03$0.524.00%
8/17/20229/7/2022GDXCovered CallSeptember 23, 2022 28 Call$0.59$0.07$0.522.03%
8/23/20229/23/2022PFECovered CallOctober 21, 2022 50 Call$1.50$0.09$1.412.82%
8/10/20229/23/2022KOShort PutSeptember 23, 2022 60 Put$0.62Assigned at $60($0.78)-1.30%
8/10/20229/23/2022WFCShort PutSeptember 23, 2022 41 Put$0.61Assigned at $41$0.020.05%
9/7/202210/17/2022BITOShort PutOctober 21, 2022 14 Call$0.40$0.03$0.372.60%
9/7/202210/17/2022GDXShort PutOctober 21, 2022 26 Call$0.70$0.04$0.662.50%
9/26/202210/21/2022WFCCovered CallOctober 21, 2022 41 Call$1.30Called away at $41$1.894.67%
9/26/202210/21/2022KOCovered CallOctober 21, 2022 60 Call$0.70$0.00$0.701.20%
9/23/20221028/2022PFECovered CallOctober 28, 2022 47 Call$0.56Called away at $47$3.497.43%
Income Trades Portfolio – Closed Trades
7/26/20228/17/2022JPMShort PutSeptember 16, 2022 100 Put$1.22$0.16$1.061.10%

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 ETFARKK62.946.465.9
Proshares Bitcoin ETFBITO65.49.471.5
iShares MSCI Emerging MarketsEEM26.847.941.7
iShares MSCI EAFEEFA25.841.968.3
iShares MSCI Mexico ETFEWW29.443.583.8
iShares MSCI BrazilEWZ55.986.446.5
iShares China Large-CapFXI53.160.627.5
Vaneck Gold MinersGDX45.755.858.4
SPDR Gold GLD17.520.241.7
iShares High-YieldHYG17.055.176.3
SPDR Regional BankKRE34.527.467.6
iShares Silver TrustSLV35.243.951.3
iShares 20+ Treasury BondTLT26.260.348
United States Oil FundUSO46.838.861.6
Proshares Ultra VIX ShortUVXY87.82.118.4
Barclays S&P 500 VIX ETNVXX60.26.617.7
SPDR BiotechXLB28.749.970.6
SPDR Energy Select XLE37.840.881.5
SPDR FinancialsXLF27.031.277.4
SPDR UtilitiesXLU26.858.469
SPDR Retail XRT42.447.672.7

Stock Watchlist – Weekly Trade Ideas

Ticker Symbol IVIV Rank HPMR Oversold - Overbought
Bank of AmericaBAC33.834.677.8
Bristol-MyersBMY23.719.982.9
Citigroup C34.330.373.8
CostcoCOST30.029.675
Cisco SystemsCSCO36.851.685.8
CVS HealthCVS31.856.858.8
Dow Inc.DOW36.135.661.7
Duke EnergyDUK28.339.567.9
FordF47.934.576.2
Gilead SciencesGILD31.839.991.5
General MotorsGM45.439.482.2
Intel INTC42.350.971.4
Johnson & JohnsonJNJ20.820.983.3
Coca-ColaKO25.135.380.9
Altria GroupMO27.130.565.2
Merck MRK23.713.487.4
Marvell Tech.MRVL63.656.757.2
Morgan StanleyMS33.734.765
MicronMU49.444.750
OracleORCL30.639.187.8
PfizerPFE31.129.878.8
PaypalPYPL6866.749.6
StarbucksSBUX41.772.152.3
AT&TT28.435.385.9
VerizonVZ27.743.561.4
Walgreens Boots AllianceWBA3127.282.1
Wells Fargo WFC33.918.577.4
WalmartWMT30.160.380.5
Exxon-MobilXOM34.336.783.3

Weekly Trade Discussion: Open Positions

Income Wheel Portfolio: Open Positions

Covered Call: GDX November 25, 2022, 26 Calls:

Original trade published on 10-17-2022 (click here to see original alert)

Current Comments: We’ve locked in $3, or 10.3% worth of premium, over five trades, since GDX was introduced to the portfolio. Our current breakeven point is 26.

Recently, with GDX trading for 23.57, we decided to sell the GDX November 25, 2022 26 calls for $0.58. At the time, the probability of the 26 calls closing out of the money was 76.40%.

Now, with GDX trading higher at 24.72, the probability of success on our 26 calls stands at 68.69%. The 26 calls are worth $0.68.

Covered Call: BITO November 25, 2022, 13.5 Calls

Original trade published on 10-17-2022 (click here to see original alert)

Current Comments: We’ve managed to sell and lock in a total of $2.18 worth of premium, or 13.6%, over four trades since introducing the 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 13.44.

Recently, with BITO trading for 12.01, we decided to sell the BITO November 25, 2022 13.5 calls for $0.38. At the time, the probability of the 13.5 calls closing out of the money was 76.16%.

Now, with BITO trading higher at 12.74, the probability of success on the trade stands at 66.95%. With 26 days left until expiration our position is in great shape.

Covered Call: KO November 25, 2022, 60 Calls

Original trade published on 10-25-2022 (click here to see original alert)

Current Comments: We managed to lock in $2.79, or 4.65% worth of premium, over four trades. Our breakeven stands at 57.21.

Recently, with KO trading for 58.30, we decided to sell the KO November 25, 2022 60 calls for $0.80. At the time, the probability of the 60 calls closing out-of-the-money was 68.43%.

Now, with KO trading higher at 60.71 and in the money, the probability of success on the trade stands at 42.82%. No worries here, if our 60 calls close in-the-money in 26 days I will be more than happy for our position to be called away, lock in some capital gains and premium and start the wheeling process over again by selling some puts in KO.

Covered Call: WFC November 25, 2022, 43 Puts

Original trade published on 10-25-2022 (click here to see original alert)

Current Comments: We’ve locked in $4.07, or 9.9% worth of premium, since introducing WFC to the portfolio back in late June. Our breakeven point, or cost basis on the position, is 36.93.

Last week, with WFC trading for 45.43 we started the wheel process over again by selling the 43 puts. At the time, the probability of the 43 puts closing out of the money was 67.12%. Now, with WFC trading higher at 46.46, the probability of success stands at 76.40%.


The next Cabot Options Institute – Income Trader issue will be published on November 7, 2022.

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.