July 24, 2023

WFC has provided us a nice source of income since we introduced the big bank to the portfolio. We’ve managed to bring in 20.5% of options premium/income in just under one year using the Income Wheel strategy while the stock itself has only made half of that return at just over 10%.

Cabot Options Institute Income Trader - Alert (WFC, DKNG)

Wells Fargo (WFC)

Today I want to buy back our August 25, 2023, 40 puts as they are near worthless, reap the profit and immediately sell more options premium in September.

WFC is currently trading for 46.77.

Here is the trade:

Buy to Close WFC August 25, 2023, 40 puts for $0.09. (As always, prices will vary, please adjust accordingly.)

Once that occurs:

Sell to Open WFC September 15, 2023, 45 puts for $0.85. (As always, prices will vary, please adjust accordingly.)

Delta of short call: 0.30
Probability of Profit: 66.34%
Probability of Touch: 67.05%
Total net credit: $0.85
Max return (cash-secured): 1.9%

Risk Management

We use WFC as part of our Income Wheel Portfolio, so if WFC closes below our put strike at expiration, we will be assigned shares of WFC (per the guidelines of the strategy). Until that point, we will repeatedly sell puts on WFC. As always, any necessary trade alerts/updates will follow.

DraftKings (DKNG)

DKNG continues to trend higher, so we are going to buy back our August puts, lock in profits and immediately sell more puts for the September expiration cycle.

DKNG is currently trading for 30.59.

Here is the trade:

Buy to Close DKNG August 18, 2023, 22.5 put for $0.12. (As always, prices will vary, please adjust accordingly.)

Sell to Open DKNG September 15, 2023, 28 put for $1.36. (As always, prices will vary, please adjust accordingly.)

Delta of short call: 0.29
Probability of Profit: 63.11%
Probability of Touch: 70.26%
Total net credit: $1.36
Max return (cash-secured): 4.8%

Risk Management

We will use DKNG as part of our Income Wheel Portfolio, so if DKNG closes below our put strike at expiration, we will be assigned shares of DKNG (per the guidelines of the strategy). Until that point, we will repeatedly sell puts on DKNG. Of course, any necessary trade alerts/updates will follow.

As always, if you have any questions, please do not hesitate to email me at andy@cabotwealth.com.

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.