Cabot Options Institute Income Trader - Alert (PFE, GDX, KO)
Pfizer (PFE)
PFE rallied over the past expiration cycle and as a result, our June 16, 2023, 40 calls were “called” away last week. We made 4.4% on the income trade. Per our Income Wheel guidelines, we will remain mechanical and sell puts in PFE today.
PFE is currently trading for 39.34.
Here is the trade:
Sell to Open PFE August 18, 2023, 37.5 puts for $0.64. (As always, prices will vary, please adjust accordingly.)
Delta of short put: 0.28
Probability of Profit: 69.96%
Probability of Touch: 60.88%
Total net credit: $0.64
Max return (cash-secured): 1.7%
Risk Management
We use PFE as part of our Income Wheel Portfolio, so if PFE closes below our put strike at expiration, we will be assigned shares of PFE (per the guidelines of the strategy). Until that point, we will repeatedly sell puts on PFE. As always, any necessary trade alerts/updates will follow.
Gold Miners ETF (GDX)
As part of the Income Wheel approach, we allowed our GDX puts to expire in the money at expiration last week. As a result, we were issued shares at our chosen put strike of 34.
Today, as our Income Wheel strategy states, we are going to sell calls against our newly issued shares in GDX.
We are not selling naked calls, so you need to have at least 100 shares if you wish to enter a new position in GDX. For those of you that are new to Income Trader and wish to follow along with GDX, buying at least 100 shares of GDX for every call contract you wish to sell is required as we are in the covered call phase of the Income Wheel strategy for GDX.
GDX is currently trading for 30.14.
Here is the trade:
Sell to Open GDX August 18, 2023, 33 (covered) call for $0.52 (adjust accordingly, prices may vary from time of alert).
Delta of short call: 0.26
Probability of Profit: 77.87%
Probability of Touch: 44.64%
Total net credit: $0.52
Max return (cash-secured): 1.7%
Coca-Cola (KO)
As part of the Income Wheel approach, we allowed our KO puts to expire in the money at expiration last week. As a result, we were issued shares at our chosen put strike of 62.5.
Today, as our Income Wheel strategy states, we are going to sell calls against our newly issued shares in KO.
We are not selling naked calls, so you need to have at least 100 shares if you wish to enter a new position in KO. For those of you that are new to Income Trader and wish to follow along with KO, buying at least 100 shares of KO for every call contract you wish to sell is required as we are in the covered call phase of the Income Wheel strategy for KO.
KO is currently trading for 61.26.
Here is the trade:
Sell to Open KO August 18, 2023, 62.5 (covered) call for $0.85 (adjust accordingly, prices may vary from time of alert).
Delta of short call: 0.39
Probability of Profit: 63.15%
Probability of Touch: 72.13%
Total net credit: $0.85
Max return (cash-secured): 1.4%
As always, if you have any questions, please do not hesitate to email me at andy@cabotwealth.com.