Weekly Commentary
August expiration is upon us, and we have several trades that are due to expire.
I plan on buying back three out of the four positions, lock in profits and immediately sell more premium. PFE is our only position that could close in-the-money. If it does, no worries, we will simply follow the mechanics of the wheel strategy and allow our August 18, 2023 37.5 puts to close in-the-money at expiration and be assigned shares as a result. If this does occur, as always, we will immediately sell calls against our newly issued shares, thereby continuing the income-producing benefits of the wheel strategy.
Overall, it looks to be another profitable expiration cycle for Income Trader. And the profitable expiration cycle should finally push us above total gains in excess of 105%.
Current Positions
| Open Date | Ticker | Stock Price (open) | Stock Price (current) | Strategy | Trade | Open Price | Current Price | Delta |
| Income Wheel Portfolio - Open Trades | ||||||||
| 7/24/2023 | WFC | $46.77 | $43.73 | Short Put | September 15, 2023 45 Put | $0.85 | $1.84 | 0.65 |
| 6/21/2023 | PFE | $39.34 | $36.04 | Short Put | August 18, 2023 37.5 Put | $0.64 | $1.48 | 0.93 |
| 6/21/2023 | GDX | $30.14 | $29.46 | Covered Call | August 18, 2023 33 Call | $0.52 | $0.01 | 0.01 |
| 6/21/2023 | KO | $61.26 | $61.17 | Covered Call | August 18, 2023 62.5 Call | $0.85 | $0.05 | 0.1 |
| 7/24/2023 | DKNG | $30.59 | $29.39 | Short Put | September 15, 2023 28 Put | $1.36 | $1.10 | 0.34 |
| 6/30/2023 | BITO | $16.77 | $15.21 | Short Put | August 18, 2023 15 Put | $0.78 | $0.17 | 0.38 |
| 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% |
| 4/4/2023 | 5/8/2023 | GDX | Short Put | May 19, 2023 32 Put | $0.78 | $0.70 | $0.71 | 2.22% |
| 3/23/2023 | 5/18/2023 | BITO | Short Put | May 19, 2023 15 Put | $1.10 | $0.03 | $1.07 | 7.13% |
| 4/4/2023 | 5/24/2023 | WFC | Covered Call | May 19, 2023 40 Call | $0.55 | Called away at $40 | $3.94 | 10.76% |
| 4/28/2023 | 6/16/2023 | PFE | Covered Call | June 16, 2023 40 Call | $0.63 | Called away at $40 | $1.71 | 4.40% |
| 3/29/2023 | 6/16/2023 | KO | Short Put | June 16, 2023 62.5 Put | $0.70 | Assigned at $62.5 | ($0.13) | -0.21% |
| 5/8/2023 | 6/16/2023 | GDX | Short Put | June 16, 2023 34 Put | $0.91 | Assigned at $34 | ($1.70) | -5.00% |
| 5/18/2023 | 6/30/2023 | BITO | Short Put | June 30, 2023 14 Put | $0.45 | $0.01 | $0.44 | 3.14% |
| 5/24/2023 | 7/6/2023 | WFC | Short put | July 21, 2023 37.5 Put | $1.01 | $0.09 | $0.92 | 2.54% |
| 6/30/2023 | 7/24/2023 | DKNG | Short Put | August 18, 2023 22.5 Put | $0.63 | $0.09 | $0.54 | 2.40% |
| 7/6/2023 | 7/24/2023 | WFC | Short Put | August 25, 2023 40 Put | $0.76 | $0.12 | $0.64 | 1.60% |
| 98.61% | ||||||||
| 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% |
| 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 | 40.2 | 11.7 | 23.2 |
| ProShares Bitcoin ETF | BITO | 42.4 | 3.9 | 42.8 |
| iShares MSCI Emerging Markets | EEM | 19.4 | 24.1 | 28.2 |
| iShares MSCI EAFE | EFA | 15.4 | 18.5 | 37.1 |
| iShares MSCI Mexico ETF | EWW | 23.6 | 27.0 | 39.6 |
| iShares MSCI Brazil | EWZ | 30.2 | 6.0 | 30.1 |
| iShares China Large-Cap | FXI | 30.6 | 12.3 | 36.8 |
| VanEck Gold Miners | GDX | 30.5 | 6.7 | 41.3 |
| SPDR Gold | GLD | 11.3 | -2.8 | 27.7 |
| iShares High-Yield | HYG | 9.0 | 14.3 | 47.6 |
| SPDR Regional Bank | KRE | 31.3 | 10.7 | 50.7 |
| iShares Silver Trust | SLV | 23.3 | -3.2 | 24.3 |
| iShares 20+ Treasury Bond | TLT | 18.0 | 24.0 | 33.2 |
| United States Oil Fund | USO | 26.9 | 0.7 | 66.4 |
| ProShares Ultra VIX Short | UVXY | 117.8 | 39.6 | 41.9 |
| Barclays S&P 500 VIX ETN | VXX | 83.5 | 41.2 | 43 |
| SPDR Biotech | XLB | 16.8 | 9.2 | 33.2 |
| SPDR Energy Select | XLE | 23.4 | 2.5 | 83.2 |
| SPDR Financials | XLF | 17.4 | 8.0 | 46.2 |
| SPDR Utilities | XLU | 16.7 | 14.2 | 36.5 |
| SPDR Retail | XRT | 24.3 | 14.3 | 39.5 |
Stock Watchlist – Weekly Trade Ideas
| Ticker Symbol | IV | IV Rank | HPMR Oversold - Overbought | |
| Bank of America | BAC | 25.7 | 8.6 | 50.3 |
| Bristol-Myers | BMY | 21.6 | 14.9 | 47.4 |
| Citigroup | C | 25.5 | 105.5 | 26.7 |
| Costco | COST | 18.9 | 17.8 | 62.8 |
| Cisco Systems | CSCO | 26.7 | 37.3 | 69.9 |
| CVS Health | CVS | 22.1 | 18.1 | 56.2 |
| Dow Inc. | DOW | 23.2 | 15.2 | 55.9 |
| Duke Energy | DUK | 20.5 | 26.6 | 62.8 |
| Ford | F | 35.8 | -17.8 | 12.9 |
| Gilead Sciences | GILD | 25.1 | 15.1 | 66.9 |
| General Motors | GM | 35.0 | 3.8 | 15.9 |
| Intel | INTC | 35.0 | 19 | 51.8 |
| Johnson & Johnson | JNJ | 24.6 | 62.9 | 65.4 |
| Coca-Cola | KO | 20.5 | 6.5 | 45.5 |
| Altria Group | MO | 14.2 | 11.3 | 18.1 |
| Merck | MRK | 17.5 | 8.6 | 59.1 |
| Marvell Tech. | MRVL | 20.0 | 14.4 | 20.5 |
| Morgan Stanley | MS | 58.4 | 50.3 | 27.8 |
| Micron | MU | 23.1 | 9.1 | 27.5 |
| Oracle | ORCL | 37.2 | 11.9 | 33.3 |
| Pfizer | PFE | 30.3 | 26.1 | 55.4 |
| PayPal | PYPL | 22.4 | 9.1 | 25.7 |
| Starbucks | SBUX | 33.7 | 4.9 | 48.1 |
| AT&T | T | 21.9 | 11.2 | 52.1 |
| Verizon | VZ | 22.9 | 22.6 | 53.2 |
| Walgreens Boots Alliance | WBA | 21 | 25.5 | 38.2 |
| Wells Fargo | WFC | 27.7 | 11.9 | 30.3 |
| Walmart | WMT | 26.5 | 8.3 | 68.3 |
| Exxon Mobil | XOM | 22.8 | 34.8 | 80.6 |
Weekly Trade Discussion: Open Positions
Income Wheel Portfolio: Open Positions
Selling Puts: BITO August 18, 2023, 15 Puts
Original trade published on 6-30-2023 (click here to see original alert)
Current Comments: We sold the August 18, 2023, 15 puts for $0.78. At the time of the alert, BITO was trading for 16.77.
Now, with BITO trading for 15.21, the probability of success stands at 77.05%, and the price of the 15 puts sits at roughly $0.17. With one week left until expiration, there is a good chance I simply take the trade off the table this week. We’ve managed to make some incredible profits in BITO by using our “wheel” approach and it might be time to take all those profits and move on to another opportunity. I’ll go into greater detail at a later date if I decide to take this route.
Selling Puts: WFC September 15, 2023, 45 Puts
Original trade published on 7-24-2023 (click here to see original alert)
Current Comments: We sold the September 15, 2023, 40 puts for $0.85. At the time of the alert, WFC was trading for 46.77.
Now, with WFC trading for 43.73, the probability of success stands at 32.80%, and the price of the 45 puts sits at $1.84. There are 32 days left in the September 15, 2023 expiration cycle. Not much to do at the moment other than patiently wait for our position to work its way through the early phase of our WFC September expiration trade.
Selling Puts: PFE August 18, 2023, 37.5 Puts
Original trade published on 6-21-2023 (click here to see original alert)
Current Comments: We sold the August 18, 2023, 37.5 puts for $0.64. At the time of the alert, PFE was trading for 39.34.
Now, with PFE trading for 36.04, the price of the 37.5 puts sits at $1.48. There are 5 days left in the August 18, 2023 expiration cycle. If PFE manages to stay below our 37.5 strike we will simply be assigned shares of PFE and move to the covered call portion of the income cycle strategy for PFE.
Covered Calls: GDX August 18, 2023, 33 Calls
Original trade published on 6-21-2023 (click here to see original alert)
Current Comments: We sold the August 18, 2023, 33 calls for $0.52. At the time of the alert, GDX was trading for 30.14.
Now, with GDX trading for 29.46, the probability of success stands at 99.10%, and the price of the 33 calls sits at $0.01. There are 5 days left in the August 18, 2023 expiration cycle and as it stands our position is in great shape. I’ll be sending out an alert early in the week to buy back our 33 calls, lock in profits and immediately sell more call calls in GDX.
Covered Calls: KO August 18, 2023, 62.5 Calls
Original trade published on 6-21-2023 (click here to see original alert)
Current Comments: We sold the August 18, 2023, 62.5 calls for $0.85. At the time of the alert, KO was trading for 61.26.
Now, with KO trading for 61.17, the probability of success stands at 90.58%, and the price of the 62.5 calls sits at $0.05. There are 5 days left in the August 18, 2023 expiration cycle so like our GDX position, I’ll be sending out an alert to buy back our calls, lock in profits and immediately sell more call premium.
Selling Puts: DKNG September 15, 2023, 28 Puts
Original trade published on 7-24-2023 (click here to see original alert)
Current Comments: We sold the September 15, 2023, 28 puts for $1.36. At the time of the alert, DKNG was trading for 30.59.
Now, with DKNG trading for 29.39, the probability of success stands at 60.58%, and the price of the 28 puts sits at $1.10. There are still 32 days left in the September 15, 2023 expiration cycle and we once again have the opportunity to take some nice profits off the table in DKNG. I’ll continue to hold our September 28 calls with the hope of collecting some nice premium over the coming few weeks.
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 August 21, 2023.