Grasshopper Trade with Draftkings

I was just filled on an In-the-Money Covered Call with Draftkings (DKNG).

You might be wondering why I’m doing so many In-the-Money Covered Calls. The reason is I don’t trust this market. If the stock drops back and I don’t get assigned I have a bigger premium. And being In-the-Money gives me a better chance to get assigned. With DKNG I bought 100 shares of stock at $44.23 and I sold the $44 Call. This is a more expensive Grasshopper Trade but not too bad. The investment was $4423.

Buy 100 Shares DKNG @ $44.23

Sell to Open 1 DKNG 5/21/21 $44.00 C @ 90¢ (+$90)

If the stock drops back and I don’t get assigned I keep the 90¢ premium for a return of 2% for the 2 day trade. If I get assigned I’ll lose 23¢ on the stock sale and my return will be 1.5%.

Also, these In-the-Money makes me feel like if I don’t get assigned it’s OK.

Now I have to get into my backyard to get some work done. After that I have a nice evening planned, today I’m celebrating my birthday.

Successful trade,

Steve

The Options Coach