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Income Trader
Reliable Income From Time-Tested Strategies

COI Income Trader Issue: May 30, 2023

Weekly Commentary

After locking in 10.8% in Wells Fargo (WFC) at the May 19, 2023, expiration cycle, we decided to sell more puts in WFC during the middle of last week. Since we are early in the trade in WFC, and thus there’s not much to discuss, there will be no comments on the current status of the trade below. Our total return since initiating the Income Trader service just under one year ago stands at 90.8%.

My focus this week will be adding another one or two trades to the mix. Moreover, we could have the opportunity to buy back some of our short premium put positions, lock in profits and immediately sell more put premium.

Current Positions

Open DateTickerStock Price (open)Stock Price (current)StrategyTradeOpen PriceCurrent PriceDelta
Income Wheel Portfolio - Open Trades
3/29/2023PFE$40.15 $37.60 Covered CallJune 16, 2023 40 Call$0.63 $0.20 0.16
3/29/2023KO$61.75 $60.26 Short PutJune 16, 2023 62.5 Put$0.70 $2.58 0.76
5/8/2023GDX$35.43 $30.41 Short PutJune 16, 2023 34 Put$0.91 $3.65 0.9
5/24/2023WFC$40.77 $41.23 Short PutJuly 21, 2023 37.5 Put$1.01 $0.79 0.22
5/18/2023BITO$15.65 $15.44 Short PutJune 30, 2023 14 Put$0.45 $0.32 0.23
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 $0.65 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%
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%
4/4/20235/19/2023WFCCovered Call May 19, 2023 40 Call$0.55 Called away at $40$3.94 10.76%
Income Trader Portfolio
7/26/20228/17/2022JPMShort PutSeptember 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 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 ETFARKK40.58.653.9
Proshares Bitcoin ETFBITO42.11.344.3
iShares MSCI Emerging MarketsEEM17.710.353.5
iShares MSCI EAFEEFA17.16.940.2
iShares MSCI Mexico ETFEWW21.98.854.5
iShares MSCI BrazilEWZ30.12.562.4
iShares China Large-CapFXI29.69.035.9
Vaneck Gold MinersGDX34.78.018.9
SPDR Gold GLD16.018.431.6
iShares High-YieldHYG9.31.646.4
SPDR Regional BankKRE44.529.558.4
iShares Silver TrustSLV29.17.538.6
iShares 20+ Treasury BondTLT20.622.439
United States Oil FundUSO34.817.054
Proshares Ultra VIX ShortUVXY117.341.938
Barclays S&P 500 VIX ETNVXX79.733.639.4
SPDR BiotechXLB19.816.331.7
SPDR Energy Select XLE30.316.541.7
SPDR FinancialsXLF21.911.846.2
SPDR UtilitiesXLU19.915.413.1
SPDR Retail XRT28.713.034.4

Stock Watchlist – Weekly Trade Ideas

Ticker Symbol IVIV Rank HPMR Oversold - Overbought
Bank of AmericaBAC32.417.954.2
Bristol-MyersBMY22.83221.8
Citigroup C31.815.836.7
CostcoCOST21.36.767.4
Cisco SystemsCSCO20.68.875.4
CVS HealthCVS26.225.931.6
Dow Inc.DOW28.9823.3
Duke EnergyDUK22.817.49.6
FordF37.75.464.8
Gilead SciencesGILD28.233.529
General MotorsGM37.06.348.4
Intel INTC40.72652.4
Johnson & JohnsonJNJ18.016.730.9
Coca-ColaKO18.919.930.6
Altria GroupMO21.217.737.7
Merck MRK24.241.545
Marvell Tech.MRVL48.613.380.8
Morgan StanleyMS28.915.338
MicronMU46.233.177
OracleORCL30.824.987.5
PfizerPFE25.822.925.1
PaypalPYPL37.73.525.9
StarbucksSBUX24.34.741.5
AT&TT26.119.221.6
VerizonVZ23.218.423.8
Walgreens Boots AllianceWBA33.11536.2
Wells Fargo WFC33.827.760.1
WalmartWMT19.40.639.9
Exxon-MobilXOM30.29.344.6

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 37.60, the probability of success stands at 85.68%, and the price of the 40 calls sits at $0.18. There are 17 days left until expiration and with the price sitting at only $0.18, there is a good chance we will simply buy back our 40 calls and immediately sell more, preferably with the July 21 expiration cycle.

COI_IT_053023_PFE.png

Selling Puts: BITO June 30, 2023, 14 Puts
Original trade published on 5-18-2023 (click here to see original alert)

Current Comments: We sold the June 30, 2023, 14 puts for $0.45. At the time of the alert, BITO was trading for 15.65.

Now, with BITO trading for 15.44, the probability of success stands at 76.22%, and the price of the 14 puts sits at roughly $0.32. We are early in the expiration cycle, so there really isn’t much to discuss at the moment, other than so far, so good.

COI_IT_053023_BITO.png

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 60.26, the probability of success stands at 16.98%, and the price of the 62.5 puts sits at $2.58. If KO closes below the 62.5 put strike at expiration in 17 days, no worries, we will simply be assigned shares at the 62.5 strike and immediately sell calls against our newly acquired shares.

COI_IT_053023_KO.png

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 30.41, the probability of success stands at 7.48%, and the price of the 34 puts sits at $3.65. Like KO, if GDX were to close below our June 16, 2023, 34 puts we would simply enter the covered call phase of the income wheel strategy, which would entail accepting shares at the 34 strike and immediately selling more call premium.

COI_IT_053023_GDX.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 June 5, 2023.

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.