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Income Trader
Reliable Income From Time-Tested Strategies

COI Income Trader Issue: January 22, 2024

We locked in three more profitable trades at expiration last Friday, bringing our total positive trades total for the January 19, 2024 expiration cycle to five. Our total returns so far in January are 10.86% with the potential for a return in PFE that would certainly add a few percentage points to our overall returns for the month.

As stated above, we have one position, PFE, that is due to expire this week. As it stands, our position is currently sitting at-the-money, but it doesn’t really matter where it closes at expiration this Friday as we will continue to follow the guidelines for our income wheel strategy.

Weekly Commentary

We locked in three more profitable trades at expiration last Friday, bringing our total positive trades total for the January 19, 2024 expiration cycle to five. Our total returns so far in January are 10.86% with the potential for a return in PFE that would certainly add a few percentage points to our overall returns for the month.

As stated above, we have one position, PFE, that is due to expire this week. As it stands, our position is currently sitting at-the-money, but it doesn’t really matter where it closes at expiration this Friday as we will continue to follow the guidelines for our income wheel strategy.

Per our strategy guidelines, if PFE closes above the 28 call strike at expiration our stock will be called away, we will lock in any capital gains and of course keep our call premium. If PFE closes below the 28 call strike at expiration on Friday, well, we simply keep our call premium and sell more call premium early the following week.

I will also be selling more premium in DKNG, GDX, BITO and possibly a new position early this week. Stay tuned for the trade alerts!

It’s been a good start to the year. Let’s keep it simple, stay mechanical and allow the strategy to do the heavy lifting.

Our total returns now sit just 0.5% away from all-time highs of 123.7%. We introduced the portfolio in June 2022 and continue to be impressed by the resilient and consistent nature of the income wheel strategy during all market environments.

Current Positions

Open DateTickerStock Price (open)Stock Price (current)StrategyTradeOpen PriceCurrent PricePosition Delta
Income Wheel Portfolio - Open Trades
12/18/2023PFE$27.42 $28.70 Covered CallJanuary 26, 2024 28 Call$0.46 $0.47 0.66
1/11/2024XLU$62.92 $63.32 Selling PutsFebruary 23, 2024 61 Put$0.65 $1.12 0.48
1/11/2024KO$59.73 $60.39 Selling PutsFebruary 23, 2024 59 Put$0.70 $0.63 0.34
Open DateClose DateTickerStrategyTradeOpen Price Closed PriceProfitReturn
Income Wheel Portfolio - Closed Trades
6/2/20227/8/2022PFEShort 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%
7/26/20228/17/2022JPMShort PutSeptember 16, 2022 100 Put$1.22 $0.16 $1.06 1.10%
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%
4/4/20235/8/2023GDXShort PutMay 19, 2023 32 Put$0.78 $0.70 $0.71 2.22%
3/23/20235/18/2023BITOShort PutMay 19, 2023 15 Put$1.10 $0.03 $1.07 7.13%
4/4/20235/24/2023WFCCovered Call May 19, 2023 40 Call$0.55 Called away at $40$3.94 10.76%
4/28/20236/16/2023PFECovered Call June 16, 2023 40 Call$0.63 Called away at $40$1.71 4.40%
3/29/20236/16/2023KOShort PutJune 16, 2023 62.5 Put$0.70 Assigned at $62.5($0.13)-0.21%
5/8/20236/16/2023GDXShort PutJune 16, 2023 34 Put$0.91 Assigned at $34($1.70)-5.00%
5/18/20236/30/2023BITOShort PutJune 30, 2023 14 Put$0.45 $0.01 $0.44 3.14%
5/24/20237/6/2023WFCShort putJuly 21, 2023 37.5 Put$1.01 $0.09 $0.92 2.54%
6/30/20237/24/2023DKNGShort PutAugust 18, 2023 22.5 Put$0.63 $0.09 $0.54 2.40%
7/6/20237/24/2023WFCShort PutAugust 25, 2023 40 Put$0.76 $0.12 $0.64 1.60%
6/21/20238/18/2023PFEShort PutAugust 18, 2023 37.5 Put$0.64 Assigned at $37.5($0.24)-0.64%
6/21/20238/18/2023GDXCovered CallAugust 18, 2023 33 Call$0.52 $0.00 $0.52 1.60%
6/21/20238/18/2023KOCovered Call August 18, 2023 62.5 Call$0.85 $0.00 $0.85 1.40%
6/30/20238/18/2023BITOShort PutAugust 18, 2023 15 Put$0.78 Assigned at $15($0.78)-5.20%
7/24/20239/14/2023DKNGShort PutSeptember 15, 2023 28 Put$1.36 $0.02 $1.34 4.79%
8/21/20239/14/2023PFECovered Call September 29, 2023 38 Call$0.78 $0.02 $0.76 2.00%
8/21/20239/14/2023KOCovered Call September 29, 2023 61 Call$0.78 $0.03 $0.75 1.23%
7/24/20239/15/2023WFCShort PutSeptember 15, 2023 45 Put$0.85 Assigned at $45($1.20)-2.67%
8/21/20239/29/2023BITOCoveredCallSeptember 29, 2023 14 Call$0.48 $0.00 $0.48 3.58%
9/14/202310/13/2023PFECoveredCallOctober 20, 2023 35 Call$0.58 $0.04 $0.54 1.47%
9/14/202310/13/2023KOCoveredCallOctober 27, 2023 59 Call$0.95 $0.03 $0.92 1.49%
9/14/202310/20/2023DKNGShort PutOctober 20, 2023 30 Put$0.98 Assigned at $30($1.95)-6.50%
8/21/202310/20/2023GDXCovered CallOctober 20, 2023 29 Call$0.86 $0.00 $0.86 3.11%
9/18/202310/20/2023WFCCovered CallOctober 20, 2023 44.5 Call$0.89 $0.00 $0.89 2.05%
10/13/202311/9/2023PFECovered Call November 24, 2023 34 Call$0.62 $0.03 $0.59 1.80%
10/23/202311/13/2023GDXCovered Call December 1, 2023 31.5 Call$0.58 $0.04 $0.54 1.80%
10/23/202311/17/2023DKNGCovered Call November 17, 2023 32 Call$0.87 Called away at $32$2.87 9.57%
10/2/202311/17/2023BITOCovered Call November 17, 2023 15 Call$0.47 Called away at $15$0.47 3.13%
10/13/202311/24/2023KOCovered Call November 24, 2023 55 Call$0.75 Called away at $55($6.75)-10.80%
10/23/202312/1/2023WFCCovered CallDecember 1, 2023 41 Call$0.87 Called away at $41($3.13)-6.95%
10/25/202312/5/2023XLUShort PutDecember 15, 2023 56 Put$0.80 $0.02 $0.78 1.39%
11/9/202312/15/2023PFECovered Call December 15, 2023 31 Call$0.62 $0.00 $0.62 2.08%
11/20/202312/15/2023DKNGSelling PutsDecember 15, 2023 36 Put$0.65 Assigned at $36$0.00 0.00%
11/20/202312/20/2023BITOSelling PutsDecember 22, 2023 16.5 Put$0.50 $0.02 $0.48 2.91%
12/5/20231/11/2024XLUSelling PutsJanuary 19, 2024 61 Put$0.80 $0.11 $0.69 1.10%
11/27/20231/11/2024KOSelling PutsJanuary 19, 2024 57.5 Put$0.76 $0.04 $0.72 1.25%
12/18/20231/19/2024DKNGCovered Call January 19, 2024 38 Call$0.83 $0.00 $0.83 2.34%
11/13/20231/19/2024GDXCovered CallJanuary 19, 2024 29 Call$0.62 $0.00 $0.62 2.27%
12/20/20231/19/2024BITOSelling PutsJanuary 19, 2024 20 Put$0.78 $0.00 $0.78 3.90%

Weekly High-Probability Mean Reversion Indicator

Below is my watch list of ETFs and stocks with the most liquid options headed into the week of January 22, 2024.

Here are the various levels I use to determine if an ETF is in an oversold or overbought state.

Very Overboughta reading greater than or equal to 80.0
Overboughtgreater than or equal to 60.0
Neutralbetween 40 to 60
Oversoldless than or equal 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

Exchange Traded FundTicker Symbol IVIV Rank HPMR Oversold - Overbought
ARK Innovation ETFARKK39.526.230.7
ProShares Bitcoin ETFBITO59.934.235.4
SPDR Dow JonesDIA12.214.465.9
iShares MSCI Emerging MarketsEEM18.128.141
iShares MSCI EAFEEFA14.217.945.9
iShares MSCI Mexico ETFEWW25.751.946.9
iShares MSCI BrazilEWZ24.83.127.1
iShares China Large-CapFXI32.658.429.8
VanEck Gold MinersGDX33.946.226.7
SPDR Gold GLD12.820.148.1
iShares High-YieldHYG8.324.950
iShares Russell 2000IWM21.732.744.9
SPDR Regional BankKRE30.418.752.9
VanEck Oil ServicesOIH32.220.339.9
Invesco Nasdaq 100QQQ17.815.979.9
iShares Silver TrustSLV24.812.133.5
VanEck SemiconductorSMH27.134.683.8
SPDR S&P 500 SPY 13.511.271.9
iShares 20+ Treasury BondTLT16.72328.3
United States Oil FundUSO35.240.257.8
ProShares Ultra VIX ShortUVXY92.112.440.8
CBOE Market Volatility IndexVIX83.836.848.4
Barclays S&P 500 VIX ETNVXX62.110.941.4
SPDR BiotechXLB15.017.928.4
SPDR Energy Select XLE23.415.430
SPDR FinancialsXLF15.26.164.8
SPDR UtilitiesXLU18.332.421.7
SPDR S&P Oil & Gas ExplorerXOP28.114.426.4
SPDR Retail XRT24.325.937.8

Stock Watchlist – Weekly Trade Ideas

Stock - Income TraderTicker Symbol IVIV Rank HPMR Oversold - Overbought
AppleAAPL24.435.966.5
Bank of AmericaBAC24.610.237.3
Bristol-Myers SquibbBMY28.692.333.6
CitigroupC24.87.342.3
CaterpillarCAT30.346.346.2
ComcastCMCSA30.253.354.2
CostcoCOST17.417.283.7
Cisco SystemsCSCO26.352.471.7
ChevronCVX25.737.430.3
DisneyDIS34.571.361.4
Duke EnergyDUK19.932.231.4
FedExFDX20.64.443.3
Gilead SciencesGILD27.344.173.9
General MotorsGM35.938.350.5
IntelINTC46.575.958.9
Johnson & JohnsonJNJ18.849.363
JPMorganJPM17.95.459.2
Coca-ColaKO16.530.450.3
Altria GroupMO20.038.931.9
MerckMRK20.219.782.2
Morgan StanleyMS23.713.029.4
MicrosoftMSFT27.148.087.3
NextEra EnergyNEE33.764.520.6
NvidiaNVDA41.022.989.6
PfizerPFE29.667.141
PayPalPYPL55.487.872.9
StarbucksSBUX31.87553.5
AT&TT29.447.650.5
VerizonVZ23.737.858.5
Walgreens Boots AllianceWBA42.549.420.9
Wells FargoWFC24.45.450.8
WalmartWMT18.133.666.2
Exxon MobilXOM27.131.329.8

Weekly Trade Discussion: Open Positions

Income Wheel Portfolio: Open Positions


Selling Puts: XLU February 23, 2024, 61 Puts
Original trade published on 1-11-2024 (click here to see original alert)

Current Comments: We sold the February 23, 2024, 61 puts for $0.65. At the time of the alert, XLU was trading for 62.92.

Now, with XLU trading for 60.98, the probability of closing at expiration out of the money stands at 49.97%, and the price of the 61 puts sits at roughly $1.12. There are 33 days left in the February 23, 2024, expiration cycle.

COI_IT_012224_XLU.png

Selling Puts: KO February 23, 2024, 59 Puts
Original trade published on 1-11-2024 (click here to see original alert)

Current Comments: We sold the February 23, 2024, 59 puts for $0.70. At the time of the alert, KO was trading for 59.73.

Now, with KO trading for 59.83, the probability of closing at expiration out of the money stands at 64.79%, and the price of the 59 puts sits at roughly $0.63. There are 33 days left in the February 23, 2024, expiration cycle. So far, so good.

COI_IT_012224_KO.png

Selling Puts: PFE January 26, 2024 28 Covered Call
Original trade published on 12-18-2023 (click here to see original alert)

Current Comments: We sold the January 26, 2024, 28 calls for $0.46. At the time of the alert, PFE was trading for 26.90.

Now, with PFE trading for 28.28, the probability of closing at expiration out of the money stands at 34.66%, and the price of the 28 calls sits at roughly $0.47. There are 5 days left in the January 26, 2024, expiration cycle. Per our strategy guidelines, if PFE closes above the 28 call strike at expiration our stock will be called away, we will lock in any capital gains and of course keep our call premium. If PFE closes below the 28 call strike at expiration on Friday, well, we simply keep our call premium and sell more call premium early the following week. Either way, at least as it stands now, we are in great shape.

COI_IT_012224_PFE.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 January 29, 2024.