COI Income Trader Issue: March 25, 2024

Weekly Commentary

The slow and steady approach continues to work in all market environments. We continue to tack on small gains each and every week via laddering. By laddering the expiration cycles of our positions, we have been able to collect income each and every week. This week, we locked in and added 2.3% to our total returns. Doesn’t sound like much to the uninitiated, but for those participating in the strategy our Income Trader portfolio continues to shine with a total return of 161.5%.

And it doesn’t stop there.

This week we are on track to lock in 4.0% in BITO and 3.0% in DKNG. Again, as we have spoken about numerous times over the past month, I want to continue to ladder our positions going forward so we have the ability to reap returns on a weekly basis. So, expect to see a few additional trades early this week including a new trade in GDX, XLU and a few others. We currently have four positions in the portfolio and my goal is to add another 3 to 4 to the mix.

As always, if you have any questions, comments or feedback, please never hesitate to email me at andy@cabotwealth.com.

Current Positions

Weekly High-Probability Mean Reversion Indicator

Below is my watch list of ETFs and stocks with the most liquid options headed into the week of March 25, 2024.

Here are the various levels I use to determine if an ETF is in an oversold or overbought state.

Each week I also include the current implied volatility (IV) and IV Rank. I look for an IV rank above 40, preferably higher.

ETF Watchlist – Weekly Trade Ideas

Stock Watchlist – Weekly Trade Ideas

Weekly Trade Discussion: Open Positions

Income Wheel Portfolio: Open Positions

Covered Calls: PFE May 3, 2024, 29 Calls
Original trade published on 3-22-2024 (click here to see original alert)

Current Comments: We sold the May 3, 2024, 29 calls for $0.41. At the time of the alert, PFE was trading for 27.42.

Now, with PFE trading for 27.36, the probability of closing at expiration out of the money stands at 75.62%, and the price of the 29 calls sits at roughly $0.46. There are 40 days left in the May 3, 2024, expiration cycle. We are early in the trade, but so far, so good.

Selling Puts: BITO March 28, 2024, 28 Puts
Original trade published on 3-5-2024 (click here to see original alert)

Current Comments: We sold the March 28, 2024, 28 puts for $1.05. At the time of the alert, BITO was trading for 31.72.

Now, with BITO trading for 29.16, the probability of closing at expiration out of the money stands at 64.51%, and the price of the 28 puts sits at roughly $0.53. There are 4 days left in the March 28, 2024, expiration cycle. There is a good chance we will be adding to our total returns of over 45% in BITO at the March 28 expiration cycle if the ETF stays above the 28 strike over the next 4 days. I will likely buy back our puts early this week, lock in some profits and immediately sell more puts.

Selling Puts: DKNG March 28, 2024, 38 Puts
Original trade published on 2-22-2024 (click here to see original alert)

Current Comments: We sold the March 28, 2024, 38 puts for $1.15. At the time of the alert, DKNG was trading for 40.33.

Now, with DKNG trading for 47.20, the probability of closing at expiration out of the money stands at 99.49%, and the price of the 38 puts sits at roughly $0.01. There are 4 days left in the March 28, 2024, expiration cycle.

Selling Puts: KO April 5, 2024, 60 Puts
Original trade published on 2-26-2024 (click here to see original alert)

Current Comments: We sold the April 5, 2024, 60 puts for $0.60. At the time of the alert, KO was trading for 61.05.

Now, with KO trading for 60.49, the probability of closing at expiration out of the money stands at 65.91%, and the price of the 60 puts sits at roughly $0.27. There are 12 days left in the April 5, 2024, expiration cycle. We will continue to hold until the price of our 60 puts hits $0.10 or less. At that time we will buy back our puts, lock in profits and immediately sell more puts.

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

The next Cabot Options Institute – Income Trader issue will be

published on April 1, 2024.

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