Back on 10/2 I bought 1000 shares of Draftkings (DKNG) at $63.70 and sold a Covered Call. I was hoping to get assigned but was not. After I sold the Call the stock started to tank because of a raise in COVID cases. The stock went all the way down to the $35 area. The stock started to move but it’s still too low to get a good premium, for a near term option, without risking losing the stock at a much lower price than where I bought. Today the stock is at $42.
I decided to sell a Call out to 1/15/21 with the Strike Price of $65. This Expiration Date is 3 months away and gave me a premium of $1.10 for $1100.
10/2/20 – Buy 1000 Shares DKNG @ $63.70
11/5/20 – Sell to Open 10 DKNG 1/15/21 $65.00 C @ $1.10 (+$1100)
I feel bringing in an $1100 premium was better than leaving the stock idle. If the stock goes up and I get assigned at $65 I also make money on the stock sale. I like this position and it gets a Risk Factor 1.
Successful Trading,
Steve
The Options Coach