Weekly Commentary
Earnings season is upon us, so I expect to take advantage of the heightened premiums and add a few positions over the next week or so. My preference is to enter a position shortly after earnings are announced. Yes, volatility is mostly crushed after earnings are announced, but there is often some inflated premium left, and if the inflated premium happens to be available in one of the stocks on our watch list, well, expect to see a trade or two.
As for our current positions, all is well. Five out of the six positions are in great shape to reap profits. The only stock that has a position in-the-money is our PFE August 18, 2023, 37.5 puts, which is currently trading just below our short put strike at 36.62.
If all goes well we should expect to collect 8% to 12% in just 32 days.
Current Positions
| Open Date | Ticker | Stock Price (open) | Stock Price (current) | Strategy | Trade | Open Price | Current Price | Delta |
| Income Wheel Portfolio - Open Trades | ||||||||
| 7/6/2023 | WFC | $42.61 | $43.56 | Short Put | August 25, 2023 40 Put | $0.76 | $0.34 | 0.16 |
| 6/21/2023 | PFE | $39.34 | $36.32 | Short Put | August 18, 2023 37.5 Put | $0.64 | $1.89 | 0.63 |
| 6/21/2023 | GDX | $30.14 | $31.96 | Covered Call | August 18, 2023 33 Call | $0.52 | $0.79 | 0.39 |
| 6/21/2023 | KO | $61.26 | $60.90 | Covered Call | August 18, 2023 62.5 Call | $0.85 | $0.45 | 0.29 |
| 6/30/2023 | DKNG | $26.57 | $30.55 | Short Put | August 18, 2023 22.5 Put | $0.63 | $0.16 | 0.05 |
| 6/30/2023 | BITO | $16.77 | $16.13 | Short Put | August 18, 2023 15 Put | $0.78 | $0.47 | 0.34 |
| 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% |
| 94.61% | ||||||||
| 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 | 39.3 | 9.1 | 70.7 |
| Proshares Bitcoin ETF | BITO | 45.9 | 11.4 | 44 |
| iShares MSCI Emerging Markets | EEM | 18.0 | 18.9 | 68.2 |
| iShares MSCI EAFE | EFA | 13.8 | 11.4 | 67.6 |
| iShares MSCI Mexico ETF | EWW | 19.1 | 4.2 | 62.8 |
| iShares MSCI Brazil | EWZ | 28.8 | 5.5 | 52.5 |
| iShares China Large-Cap | FXI | 29.1 | 8.8 | 60.2 |
| Vaneck Gold Miners | GDX | 30.8 | 8.3 | 69 |
| SPDR Gold | GLD | 12.1 | 0.3 | 67 |
| iShares High-Yield | HYG | 7.8 | 6.2 | 57.8 |
| SPDR Regional Bank | KRE | 36.4 | 19.5 | 61.1 |
| iShares Silver Trust | SLV | 26.2 | 9.5 | 81.6 |
| iShares 20+ Treasury Bond | TLT | 14.9 | 3.4 | 51.2 |
| United States Oil Fund | USO | 29.5 | 1.3 | 63.4 |
| Proshares Ultra VIX Short | UVXY | 102.2 | 18.6 | 27.5 |
| Barclays S&P 500 VIX ETN | VXX | 70.2 | 18.7 | 28 |
| SPDR Biotech | XLB | 15.9 | 5.9 | 63.9 |
| SPDR Energy Select | XLE | 24.8 | 7.4 | 49.6 |
| SPDR Financials | XLF | 16.1 | 2.6 | 66.4 |
| SPDR Utilities | XLU | 15.5 | 5.5 | 60.9 |
| SPDR Retail | XRT | 24.1 | 8.4 | 58.9 |
Stock Watchlist – Weekly Trade Ideas
| Ticker Symbol | IV | IV Rank | HPMR Oversold - Overbought | |
| Bank of America | BAC | 30.8 | 14.6 | 54.2 |
| Bristol-Myers | BMY | 22.2 | 25 | 22.3 |
| Citigroup | C | 25.0 | 2.6 | 40.7 |
| Costco | COST | 16.8 | 5.9 | 73 |
| Cisco Systems | CSCO | 21.5 | 22.1 | 40.5 |
| CVS Health | CVS | 29.2 | 41.8 | 66 |
| Dow Inc. | DOW | 26.0 | 14.2 | 45.2 |
| Duke Energy | DUK | 22.4 | 16.8 | 65.8 |
| Ford | F | 37.4 | 11.9 | 53.4 |
| Gilead Sciences | GILD | 26.7 | 32.2 | 58.2 |
| General Motors | GM | 33.8 | 9.7 | 68.8 |
| Intel | INTC | 46.2 | 45.2 | 49.4 |
| Johnson & Johnson | JNJ | 17.1 | 24.6 | 43.5 |
| Coca-Cola | KO | 16.0 | 17.1 | 60.6 |
| Altria Group | MO | 17.7 | 13 | 53.4 |
| Merck | MRK | 23.0 | 31.8 | 33.3 |
| Marvell Tech. | MRVL | 41.9 | 5.9 | 61.6 |
| Morgan Stanley | MS | 26.8 | 12.5 | 56.8 |
| Micron | MU | 34.7 | 2.1 | 51.5 |
| Oracle | ORCL | 25 | 19.4 | 66.7 |
| Pfizer | PFE | 25 | 28.3 | 46.5 |
| Paypal | PYPL | 46.7 | 26.3 | 73.8 |
| Starbucks | SBUX | 30.2 | 35.5 | 68.7 |
| AT&T | T | 34.2 | 60.9 | 13.2 |
| Verizon | VZ | 26.8 | 38 | 17.3 |
| Walgreens Boots Alliance | WBA | 27 | 5.8 | 39.8 |
| Wells Fargo | WFC | 26 | 1.9 | 65.8 |
| Walmart | WMT | 17 | 14.8 | 46.6 |
| Exxon-Mobil | XOM | 28.4 | 17.3 | 30.4 |
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 16.13, the probability of success stands at 60.58%, and the price of the 15 puts sits at roughly $0.47. No worries here, at least for now. So far, so good.
Selling Puts: WFC August 25, 2023, 40 Puts
Original trade published on 7-6-2023 (click here to see original alert)
Current Comments: We sold the August 25, 2023, 40 puts for $0.76. At the time of the alert, WFC was trading for 42.61.
Now, with WFC trading for 43.56, the probability of success stands at 82.14%, and the price of the 40 puts sits at $0.34. There are 39 days left in the August 25, 2023 expiration cycle and like many of our August expiration trades, all is well.
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 36.32, the probability of success stands at 33.62%, and the price of the 37.5 puts sits at $1.88. There are 32 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 31.96, the probability of success stands at 64.04%, and the price of the 33 calls sits at $0.79. There are 32 days left in the August 18, 2023 expiration cycle and as it stands our position is in great shape.
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 60.90, the probability of success stands at 72.73%, and the price of the 62.5 calls sits at $0.45. There are 32 days left in the August 18, 2023 expiration cycle so like many of our other August expiration positions it’s all about remaining patient and allowing time decay to work its magic.
Selling Puts: DKNG August 18, 2023, 22.5 Puts
Original trade published on 6-30-2023 (click here to see original alert)
Current Comments: We sold the August 18, 2023, 22.5 puts for $0.63. At the time of the alert, DKNG was trading for 26.57.
Now, with DKNG trading for 30.55, the probability of success stands at 91.97%, and the price of the 22.5 puts sits at $0.16. There are still 32 days left in the August 18, 2023 expiration cycle. With so much time left until expiration and little premium left, there is a good chance that I buy back our August 22.5 puts this week, lock in a profit and immediately sell more puts.
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 July 24, 2023.