I have a bunch of readers who like Penn National Gaming (PENN). And I read a few reports a few weeks ago which were favorable. Just a few weeks ago the stock was up at $40. I think the stock is nearing a bottom so I just bought 1000 shares. Believe it or not I just bought 1000 shares for $4.90. Along with the stock buying I sold a 10 contract, $5 Call to expire this Friday, 3 days. I received a premium of 80¢ for $800. This premium is a return of 16% for a 3 day option. These premiums are crazy. I figured let me buy the stock to cover the Call because even if it went to $0 I wouldn’t lose that much. I feel the stock will go up a little and I’ll get assigned. Either way I’m OK with this trade.
PENN Covered Call
Buy 1000 Shares PENN @ $4.90
Sell to Open 10 PENN 3/20/20 $5.00 C @ 80¢ (+$800)
I like this trade so much I give it a Risk Factor 1. and I might do another 10 contracts.
From the start of the big drop my account is down about 28%, which really isn’t that bad, considering everything. I’m fighting back hard!
Successful Trading,
Steve
The Options Coach