11/7/2021 Plan:
This week we look at DraftKings (Ticker: DKNG)
11/7/2021 Plan (continued):
- DKNG- Sell the Nov 26 40/35 put spreads for 0.63
- RKT – Sell the Dec 3 15 put for 0.20
- Prices are as of market close 11/5/2021, actual fill and strikes may differ depending on Monday’s open, post will be updated accordingly.
- All trades are for educational purposes and do not constitute advice
11/7/2021 Commentary:
DraftKings announced earnings last week and took a pretty big hit. It recovered some on Friday and this trade assumes it doesn’t go below its 6 month low of 39.93 in the next three weeks. With implied volatility still quite a bit higher than realized (even with the large moves recently), I like this trade. Personally, I think that sports betting is going to increase over the long run and I’d take ownership of some shares and sell calls against it if DKNG is between 35 and 40 at expiration.
RKT dipped briefly below 15 in October, otherwise it has been above 15 since it went public. This trade assumes that trend continues.
I am also personally selling a bunch of other puts, like the GM Dec 3 54 put for 0.64. If you are looking for other ideas, reach out.
Feel free to Reach out with questions on this or anything else!
11/8/2021 Entry:
Sold Nov 26 40/36 in DKNG for 0.40. Sold RKT Dec 3 15 put for 0.16. Closed ABNB put spreads for 0.02.
11/13/2021 Update:
We are down on our DKNG put spreads as it has continued to sell off. It seems to be finding a floor around the 40 level as we predicted, but as with any trade, we may be wrong. Trade management-wise, I intend to leave them on this week, but will consider a roll if DKNG closes below 40 late this week/early next week. Nothing wrong with closing and taking a small loss either.
The RKT puts are flat and will take a bit to decay. No modifications planned this week for this position.
11/21/2021 Update:
The RKT puts are down a bit, but the stock remains above the 15 level. With a couple weeks to go, I’m holding.
The DKNG put spread expire this week and after a continued slide down, are likely to be a loser. Towards the end of the week, I’ll look for some rolling opportunities. We would need some recovery in the name to roll for a credit. One alternative is to expand the widths of the strike, but PLEASE note, this adds risk to the trade.
11/21/2021 Partial Close/Update:
The RKT puts are flat and expire this week. Take it off any time for a profit. If it ends below 15 this week, I’ll take the shares.
DKNG ended right near our Long strike at the end of the week, meaning that if you closed it, there was a pretty decent loss. I actually took the shares and will sell calls against it, starting with the Dec 10 40 calls for $72/call. Alternatively, the Dec 17 40 call for $108. This is a cash intensive trade and we now have the downside of the stock. If your account can’t support the position and you were assigned stock, simply close it out.
11/21/2021 Close:
The RKT puts expired worthless, adding $16 of profit per put sold. RKT really seems to have found a floor and 15 seems to provide quite a bit of support. I expect I’ll be selling more puts on Monday at or below the 15 strike (little bonus idea for those reading the recaps).
