Trades With PENN & DKNG
Penn National Gaming (PENN) has been on a run. With about 5 hours left to the trading week I did an In-the-Money Covered Call.
I bought 1000 Shares at $48.50 and sold a 10 contract Call. This is In-the-Money because I bought the stock at $48.50 and sold the $48 Call. This will expire today at close.
Buy 1000 Shares PENN @ $48.50
Sell to Open 10 PENN 8/7/20 $48.00 C @ $1.00 (+$1000)
If the stock closes above $48, which I hope it does, I’ll get assigned. On assignment I’ll lose 50¢ on the stock and keep the premium of $1. The total profit on the trade will be $500.
If I don’t get assigned I’ll keep the very hot stock and keep the premium. If this happens my profit will be $1000 and I’ll sell another Call on Monday. I’d rather get assigned going into the weekend, but either way I think it will work out good.
Any questions on In-the-Money Covered Calls send me an email.
On 6/1 I bought 500 shares of Draftkings (DKNG) at $41.50. On 7/21 I bought another 500 shares at $38.10.
Expiring today is a $41.50 Call I sold against my 500 shares I bought at $41.50. I will not get assigned!
The other 500 shares I did not sell a Call on. Since I will not get assigned on the Call I sold I’ll have a total of 1000 shares available to sell a Call on next week. I decided to gat a start on next week with the selling of a 10 Contract Call. The shares I bought at $41.50 and the shares I bought at $38.10 average out to 1000 shares at $39.80. A few minutes ago I sold a 10 contract 8/14/20 $40 Call for a premium of $1.
Sell to Open 10 DKNG 8/14/20 $40.00 C @ $1.00 (+$1000)
Until the close today 5 of these contracts are covered, but the other 5 contracts are Naked because the 500 shares are covering the Call expiring today. At the close this Call will expire and the 500 shares will be available to make this a 10 contract Covered Call.
I hope this makes sense! If not send me an email.
Both of these trades listed in this post are Risk Factor 1.
Successful trading,
Steve
The Options Coach