We are up to four positions in our Income Wheel Portfolio and I think we are approaching a decent mix right now.
Now that we are up to at least four stocks, I want to focus on finding a few shorter-term trades using a few jade lizards. Expect to see at least one if not two shorter-term trades next week as we continue to ramp up the portfolios.
Cabot Options Institute – Income Trader Issue: June 24, 2022
We are up to four positions in our Income Wheel Portfolio and I think we are approaching a decent mix right now.
Now that we are up to at least four stocks, I want to focus on finding a few shorter-term trades using a few jade lizards. Expect to see at least one if not two shorter-term trades next week as we continue to ramp up the portfolios.
Volatility continues to hover at inflated levels. As a result, opportunities to sell premium are high across the board.
And there are some big gaps overhead in the S&P 500 (SPY). Typically, we see gaps close before a trend continues for too long, so I wouldn’t be surprised to see another bear market rally to close the gaps.
Current Positions
| Open Date | Ticker | Stock Price (open) | Stock Price (current) | Strategy | Trade | Open Price | Current Price | Delta |
| Income Wheel Portfolio | ||||||||
| 6/3/2022 | PFE | $53.10 | $50.09 | Sell Put | 7/8/22 50 Put | $0.65 | $1.08 | 0.5 |
| 6/10/2022 | GDX | $30.76 | $28.91 | Sell Put | 7/15/22 29 Put | $0.66 | $0.97 | 0.29 |
| 6/10/2022 | BITO | $18.19 | $12.95 | Sell Put | 7/15/22 16 Put | $0.82 | $3.25 | 0.28 |
| 6/22/2022 | WFC | $38.57 | $37.90 | Sell Put | 7/29/22 35 Put | $0.80 | $1.00 | |
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 |
ETF Watchlist
| Ticker Symbol | IV | IV Rank | HPMR Oversold - Overbought | |
| ARK Innovation ETF | ARKK | 73.1 | 67.2 | 62.8 |
| ProShares Bitcoin ETF | BITO | 111.5 | 54.6 | 25.7 |
| iShares MSCI Emerging Markets | EEM | 25.3 | 41.9 | 38.7 |
| iShares MSCI EAFE | EFA | 23.7 | 45.8 | 29.9 |
| iShares MSCI Mexico ETF | EWW | 29.7 | 52.3 | 15 |
| iShares MSCI Brazil | EWZ | 39.6 | 55.3 | 31.3 |
| iShares China Large-Cap | FXI | 38.9 | 40 | 56.5 |
| VanEck Gold Miners | GDX | 41.1 | 61.6 | 28.8 |
| SPDR Gold | GLD | 18.3 | 23.9 | 43.2 |
| iShares High-Yield | HYG | 17 | 66.7 | 41.7 |
| SPDR Regional Bank | KRE | 34 | 45.2 | 32.9 |
| iShares Silver Trust | SLV | 31.9 | 32.6 | 34.2 |
| iShares 20+ Treasury Bond | TLT | 22.6 | 60.3 | 56.8 |
| United States Oil Fund | USO | 50.6 | 34.2 | 21.8 |
| ProShares Ultra VIX Short | UVXY | 116.4 | 4.8 | 44.7 |
| Barclays S&P 500 VIX ETN | VXX | 76.4 | 0 | 43.4 |
| SPDR Biotech | XLB | 30.1 | 63.4 | 16.8 |
| SPDR Energy Select | XLE | 50.7 | 85.6 | 20.3 |
| SPDR Financials | XLF | 31.5 | 52.2 | 30.4 |
| SPDR Utilities | XLU | 24.1 | 63.8 | 45.3 |
| SPDR Retail | XRT | 44 | 68.6 | 48.9 |
Stock Watchlist
| Ticker Symbol | IV | IV Rank | HPMR Oversold - Overbought | |
| Bank of America | BAC | 44.8 | 59.2 | 33.3 |
| Bristol-Myers | BMY | 23.1 | 25.2 | 72.1 |
| Citigroup | C | 46 | 74 | 35.3 |
| Costco | COST | 34.4 | 45.3 | 62.1 |
| Cisco Systems | CSCO | 31.2 | 41 | 35.7 |
| CVS Health | CVS | 31.7 | 48.1 | 51.3 |
| Dow Inc. | DOW | 44.6 | 83.4 | 4.9 |
| Duke Energy | DUK | 24.5 | 20 | 49.6 |
| Ford | F | 54.2 | 48.4 | 34.1 |
| Gilead Sciences | GILD | 30.1 | 17.5 | 65.3 |
| General Motors | GM | 51.1 | 64.3 | 40.5 |
| Intel | INTC | 38.3 | 54.4 | 30.3 |
| Johnson & Johnson | JNJ | 22 | 6.8 | 71.3 |
| Coca-Cola | KO | 27.7 | 64.8 | 58 |
| Altria Group | MO | 37.4 | 74.5 | 20.7 |
| Merck | MRK | 23.9 | 31.7 | 73.8 |
| Marvell Tech. | MRVL | 63.1 | 59.9 | 29.9 |
| Morgan Stanley | MS | 43.8 | 18.4 | 30.3 |
| Micron | MU | 56.7 | 11.2 | 25.4 |
| Oracle | ORCL | 33.4 | 37.2 | 44.2 |
| Pfizer | PFE | 31.7 | 49.1 | 54.5 |
| PayPal | PYPL | 67.2 | 69.3 | 39.9 |
| Starbucks | SBUX | 37.2 | 64.9 | 55.1 |
| AT&T | T | 32.9 | 60.4 | 61.3 |
| Verizon | VZ | 26.6 | 53.4 | 73.4 |
| Walgreens Boots Alliance | WBA | 37.7 | 74.5 | 49 |
| Wells Fargo | WFC | 48.7 | 57.1 | 29.5 |
| Walmart | WMT | 26.9 | 6.2 | 56.1 |
| ExxonMobil | XOM | 48.4 | 19.6 | 29.3 |
Weekly Trade Discussion: Open Positions
Income Wheel Portfolio Open Positions
Selling Put: PFE July 8, 2022, 50 Puts
Original trade published on 6-3-2022 (click to see original alert)
Current Comments: At the time of the trade PFE was trading for 53.10. We sold the July 8, 2022, 50 puts for a credit of $0.65. Our probability of success on the trade was 73.28% and the probability of touch was 51.35%.
PFE is now trading slightly lower at 50.09, $0.09 above our 50 put strike. Our breakeven is 49.35. Our probability of success stands at 49.70% and our probability of touch is 97.53%.
No worries, as I plan to wheel PFE. If I’m assigned shares at the 50 strike, I’ll gladly sell calls until my shares are eventually called away and then I’ll repeat the wheel process all over again. By continuing to sell premium we will lower our cost basis on an ongoing basis.
As I’ve said before, my goal is to have at least five to 10 positions in both the Income Wheel Portfolio and the Income Trades Portfolio.
Put Side
Selling Put: GDX July 15, 2022, 29 Puts
Original trade published on 6-10-2022 (click here to see original alert)
Current Comments: At the time of the trade GDX was trading for 30.76. We sold the July 15, 2022, 29 puts for a credit of $0.66. Our probability of success on the trade was 67.54% and the probability of touch was 62.30%.
GDX is now trading slightly lower at 28.91, $0.09 below our 29 put strike. Our breakeven is 28.34.
Our probability of success stands at 46.69% and our probability of touch is 97.33%.
I’m not really concerned, as I plan to wheel GDX. If I’m assigned shares at the 29 strike, I’ll gladly sell calls until my shares are eventually called away and then I’ll repeat the wheel process all over again. By continuing to sell premium we will lower our cost basis on an ongoing basis.
Put Side
Selling Put: BITO July 15, 2022, 16 Puts
Original trade published on 6-10-2022 (click here to see original alert)
Current Comments: At the time of the trade BITO was trading for 18.19 We sold the July 15, 2022, 16 puts for a credit of $0.82. Our probability of success on the trade was 64.65% and the probability of touch was 65.50%.
As I stated last week, the timing could not have been worse on this one. BITO is now trading lower at 12.95, $3.05 below our 16 put strike. Since BITO currently sits $3.05 below our 16 put and we sold $0.82 worth of premium we are down $2.26 ($3.05 - $0.82), or 13.94%.
Like our other two positions, I plan to wheel BITO. If I’m assigned shares at the 16 put strike, I’ll gladly accept shares and sell calls until my shares are eventually called away and then I’ll repeat the wheel process all over again. By continuing to sell premium we will lower our cost basis on an ongoing basis.
As I stated in the webinar last Thursday, I want to have underlying stocks and ETFs with various levels of implied volatility. BITO will certainly be at the extreme side of IV, but I’m OK having a bit of higher-beta exposure, knowing it will be limited to one or two stocks over the two portfolios in the Income Trader service.
Put Side
Selling Put: WFC July 29, 2022, 35 Puts
Original trade published on 6-22-2022 (click to see original alert)
Current Comments: At the time of the trade WFC was trading for 38.57. We sold the July 29, 2022, 35 puts for a credit of $0.80. Our probability of success on the trade was 72.13% and the probability of touch was 53.18%.
WFC is now trading slightly lower at 37.90, $2.90 above our 35 put strike. Our breakeven is 32.10. Our probability of success stands at 67.81% and our probability of touch is 61.27%.
No worries, as I plan to wheel WFC. If I’m assigned shares at the 35 strike, I’ll gladly sell calls until my shares are eventually called away and then I’ll repeat the wheel process all over again. By continuing to sell premium we will lower our cost basis on an ongoing basis.
Put Side
Income Trades Portfolio Open Positions
No open positions.
Next Live Analyst Briefing with Q&A
Our next live analyst briefing with Q&A is scheduled for Thursday, July 14, 2022 at 12 p.m. ET. As always, I will be discussing the options market, have a detailed look at open positions, go over strategies used, and do a follow-up with live questions. I look forward to seeing you all there! Register here.
The next Cabot Options Institute – Income Trader issue will be published on July 1, 2022.
About the Analyst
Andy Crowder
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.