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Income Trader
Reliable Income From Time-Tested Strategies

May 24, 2023

Cabot Options Institute Income Trader - Alert (WFC)

Wells Fargo (WFC)

WFC rallied over the past expiration cycle and as a result, our May 19, 2023, 40 calls were assigned, and our entire position was “called” away last week. We made 10.76% on the trade.

As a result of our WFC shares being called away, per our Income Wheel guidelines, we will remain mechanical and sell puts in WFC today.

WFC is currently trading for 40.77.

Here is the trade:

Sell to Open WFC July 21, 2023, 37.5 puts for $1.01. (As always, prices will vary, please adjust accordingly.)

COI_IT_052423_WFC.png

Delta of short call: 0.26
Probability of Profit: 69.17%
Probability of Touch: 59.68%
Total net credit: $1.01
Max return (cash-secured): 2.7%

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.

Andy Crowder is a professional options trader, researcher and Senior Analyst at Cabot. 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.