May 8, 2023

Cabot Options Institute Income Trader – Alert (GDX)

VanEck Gold Miners (GDX)

It’s time to start selling puts again in GDX. With 11 days left until expiration, our May 19, 2023, 32 puts are worth $0.07. As a result, I want to buy back our puts, lock in some profits and immediately sell more put premium.

We’ve managed to bring in 13.0% worth of premium since introducing GDX to the Income Wheel Portfolio.

GDX is currently trading for 35.43.

Here is the trade:

Buy to Close GDX May 19, 2023, 32 puts for $0.07. (As always, prices will vary, please adjust accordingly.)

Once that occurs (or if you are new to the trade):

Sell to Open GDX June 16, 2023, 34 puts for $0.91. (As always, prices will vary, please adjust accordingly.)

Delta of short call: 0.33
Probability of Profit: 63.08%
Probability of Touch: 72.73%
Total net credit: $0.91
Max return (cash-secured): 2.7%

Risk Management

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

Andy Crowder

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.