Cabot Options Institute Income Trader – Alert (BITO, WFC)
ProShares Bitcoin ETF (BITO)
Our BITO 13.5 calls for the November 25, 2022, expiration cycle are essentially worthless. As a result, I want to buy back our BITO calls, lock in our premium and immediately sell more premium.
BITO is currently trading for 10.17.
IV: 108.65%
IV Rank: 13.9
Expected Move (Range): The expected move for the December 30, 2022, expiration cycle is from roughly 7.5 to 12.5.
With BITO trading for 10.17 I want to sell calls at the 12 strike, just below the expected move, going out 43 days for roughly $0.45, if not higher. Of course, due to a wide variety of factors, prices may and most likely will vary slightly.
Here is the trade:
Buy to close BITO November 25, 2022, 13.5 call for $0.03
Once that occurs (or if you are new to the trade):
Sell to open BITO December 30, 2022, 12 call strike for a total of $0.45 or higher. (As always, prices will vary, please adjust accordingly.)
Delta of short call: 0.31
Probability of Profit: 77.58%
Probability of Touch: 48.01%
Total net credit: $0.45
Max return (cash-secured): 3.8%
Risk Management
We use BITO as part of our Income Wheel Portfolio, so if BITO closes above our call strike at expiration our shares will be called away and, in most cases, we will reap the capital benefits of the stock increase, plus the premium acquired. Until that point, we will repeatedly sell calls on BITO.
Wells Fargo (WFC)
There is little premium left in our 43 puts with 8 days until November 25, 2022, expiration. As a result, now is a good time to go ahead, lock in a nice return and immediately sell more puts. Of course, as always, you will be informed through email and text of any necessary trade alerts/updates.
WFC is currently trading for 46.02
Here is the trade:
Buy to Close WFC November 25, 2022, 43 puts for $0.07.
Once that occurs (or if you are new to the trade):
Sell to Open WFC December 30, 2022, 44 put strike for a total of $1.02 or higher. (As always, prices will vary, please adjust accordingly.)
Delta of short put: 0.31
Probability of Profit: 64.98%
Probability of Touch: 68.25%
Total net credit: $1.02
Max return (cash-secured): 2.3%
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 issued shares at the 44 strike. Until that point, we will repeatedly sell puts on WFC. Of course, as always, you will be informed through email and text of any necessary trade alerts/updates.