Weekly Commentary
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As we head towards the end of the May expiration cycle we have two positions, BITO and WFC, that need to be rolled. Both positions have little to no premium left. As a result, I want to buy back our short premium positions, lock in profits and immediately sell more premium in both positions. Be on the lookout for a trade alert Monday or Tuesday.
Current Positions
| Open Date | Ticker | Stock Price (open) | Stock Price (current) | Strategy | Trade | Open Price | Current Price | Delta |
| Income Wheel Portfolio - Open Trades | ||||||||
| 3/29/2023 | PFE | $40.15 | $37.35 | Covered Call | June 16, 2023 40 Call | $0.63 | $0.17 | 0.14 |
| 3/29/2023 | KO | $61.75 | $64.11 | Short Put | June 16, 2023 62.5 Put | $0.70 | $0.51 | 0.28 |
| 5/8/2023 | GDX | $35.43 | $33.60 | Short Put | June 16, 2023 34 Put | $0.91 | $1.50 | 0.52 |
| 4/4/2023 | WFC | $36.61 | $37.49 | Covered Call | May 19, 2023 40 Call | $0.55 | $0.05 | 0.07 |
| 3/23/2023 | BITO | $16.89 | $15.29 | Short Put | May 19, 2023 15 Put | $1.10 | $0.32 | 0.37 |
| 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% |
| 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% |
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 | 40.5 | 1.2 | 53.4 |
| Proshares Bitcoin ETF | BITO | 50.0 | 1.4 | 32.3 |
| iShares MSCI Emerging Markets | EEM | 17.5 | 10.9 | 35 |
| iShares MSCI EAFE | EFA | 16.5 | 8.4 | 45.8 |
| iShares MSCI Mexico ETF | EWW | 20.5 | 1.2 | 76.5 |
| iShares MSCI Brazil | EWZ | 33.3 | 9.0 | 64.3 |
| iShares China Large-Cap | FXI | 28.2 | 3.6 | 39.4 |
| Vaneck Gold Miners | GDX | 35.6 | 5.4 | 35 |
| SPDR Gold | GLD | 16.7 | 29.6 | 46.6 |
| iShares High-Yield | HYG | 10.3 | 4.3 | 41.8 |
| SPDR Regional Bank | KRE | 54.1 | 43.9 | 30.6 |
| iShares Silver Trust | SLV | 30.6 | 21.4 | 23.1 |
| iShares 20+ Treasury Bond | TLT | 18.1 | 7.0 | 46.8 |
| United States Oil Fund | USO | 35.4 | 17.3 | 35.5 |
| Proshares Ultra VIX Short | UVXY | 115.5 | 25.9 | 37.7 |
| Barclays S&P 500 VIX ETN | VXX | 73.6 | 25.1 | 39 |
| SPDR Biotech | XLB | 18.9 | 13.7 | 35.6 |
| SPDR Energy Select | XLE | 30.0 | 18.4 | 29.6 |
| SPDR Financials | XLF | 23.5 | 20.1 | 37.6 |
| SPDR Utilities | XLU | 17.0 | 1.0 | 52.7 |
| SPDR Retail | XRT | 27.2 | 13.0 | 42.7 |
Stock Watchlist – Weekly Trade Ideas
| Ticker Symbol | IV | IV Rank | HPMR Oversold - Overbought | |
| Bank of America | BAC | 37.0 | 32 | 30.3 |
| Bristol-Myers | BMY | 20.9 | 15.9 | 46.6 |
| Citigroup | C | 34.2 | 24.3 | 33.1 |
| Costco | COST | 24.4 | 11.6 | 62.6 |
| Cisco Systems | CSCO | 29.6 | 28 | 48 |
| CVS Health | CVS | 27.5 | 24.7 | 28.8 |
| Dow Inc. | DOW | 28.8 | 12 | 31.2 |
| Duke Energy | DUK | 19.5 | 0.8 | 42.2 |
| Ford | F | 38.4 | 4.2 | 39.2 |
| Gilead Sciences | GILD | 27.6 | 23.7 | 30.8 |
| General Motors | GM | 37.4 | 10.9 | 38.8 |
| Intel | INTC | 34.5 | 10.9 | 31.7 |
| Johnson & Johnson | JNJ | 17.1 | 13.5 | 36.9 |
| Coca-Cola | KO | 14.4 | 7.4 | 61.4 |
| Altria Group | MO | 20.9 | 21.4 | 34.1 |
| Merck | MRK | 20.8 | 14.6 | 53 |
| Marvell Tech. | MRVL | 53.3 | 16.7 | 52.1 |
| Morgan Stanley | MS | 29.4 | 20.6 | 28 |
| Micron | MU | 38.4 | 7 | 48.5 |
| Oracle | ORCL | 24.9 | 15.4 | 72.9 |
| Pfizer | PFE | 22.4 | 7.4 | 19.3 |
| Paypal | PYPL | 38.7 | 2.4 | 23 |
| Starbucks | SBUX | 22.6 | 1.6 | 40.9 |
| AT&T | T | 22.1 | 6.3 | 34.4 |
| Verizon | VZ | 20.3 | 8.5 | 43.1 |
| Walgreens Boots Alliance | WBA | 30.1 | 13.5 | 22.1 |
| Wells Fargo | WFC | 37 | 33.3 | 34.4 |
| Walmart | WMT | 24.7 | 29.9 | 67.5 |
| Exxon-Mobil | XOM | 30.4 | 19 | 27.6 |
Weekly Trade Discussion: Open Positions
Income Wheel Portfolio: Open Positions
Covered Calls: PFE June 16, 2023 40 Call
Original trade published on 4-24-2023 (click here to see original alert)
Current Comments: We sold the June 16, 2023, 40 calls for $0.63. At the time of the alert, PFE was trading for 38.77.
Now, with PFE trading for 37.35, the probability of success stands at 87.02%, and the price of the 40 calls sits at $0.17. There are 33 days left until expiration and with the price sitting at only $0.17, there is a good chance we simply buy back our 40 calls and immediately sell more, preferably with the same June 16 expiration cycle.
Selling Puts: BITO May 19, 2023, 15 Puts
Original trade published on 3-23-2023 (click here to see original alert)
Current Comments: We sold the May 19, 2023, 15 puts for $1.10. At the time of the alert, BITO was trading for 16.89.
Now, with BITO trading for 15.29, the probability of success stands at 59.75%, and the price of the 15 puts sits at roughly $0.32. I intend on buying back our puts, locking in roughly $0.80 and immediately selling more put premium early this week.
Selling Puts: KO June 16, 2023, 62.5 Puts
Original trade published on 4-24-2023 (click here to see original alert)
Current Comments: We recently sold the June 16, 2023, 62.5 puts for $0.70. At the time of the alert, KO was trading for 63.80.
Now, with KO trading for 64.11, the probability of success stands at 70.79%, and the price of the 62.5 puts sits at $0.51. We are early in the trade so all there is to do is to remain patient and allow time decay to do its job of eating away at our premium.
Selling Puts: GDX June 16, 2023, 34 Puts
Original trade published on 5-8-2023 (click here to see original alert)
Current Comments: We sold the June 16, 2023, 34 puts for $0.91. At the time of the alert, GDX was trading for 35.43.
Now, with GDX trading for 33.60, the probability of success stands at 44.58%, and the price of the 34 puts sits at $1.50. We are early in the trade so all there is to do is to remain patient and allow the position to work through the expiration cycle.
Covered Calls: WFC May 19, 2023, 40 Calls
Original trade published on 4-4-2023 (click here to see original alert)
Current Comments: We sold the May 19, 2023, 40 calls for $0.55. At the time of the alert, WFC was trading for 36.61.
Now, with WFC trading for 37.49, the probability of success stands at 93.93%, and the price of the 40 calls sits at $0.05. With 5 days left until expiration, and our 40 calls worth a paltry $0.05, I plan on buying back our calls early in the week and immediately selling more calls.
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 May 22, 2023.
