Trade Alert - (DKNG) October 8, 2020

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.

Tech Alert - DraftKings Inc. (DKNG) – SELL

SELL – STOP LOSS - DraftKings Inc. (DKNG) October 2020 $49-$52 in-the-money vertical BULL call spread at $2.15

Closing Trade

10-8-2020

expiration date: October 16, 2020

Portfolio weighting: 10%

Number of Contracts = 39 contracts

This trade has gone quickly against us and we will need to stop out on this bull call spread.

The extreme volatility is crushing the stock which is why I usually stick with tech stocks with less beta.

DraftKings’ underlying stock is close to taking out our upper strike and it’s time to bail on this one. Risk control is the order of the day.

I still believe this is a great stock but shares will need to consolidate first.

Here are the specific trades you need to exit this position:

Sell 39 October 2020 (DKNG) $49 calls at……................…………$6.30

Buy to cover short 39 October 2020 (DKNG) $52 calls at……..….$4.15

Net Proceeds:……………………..…….………..….......................….....$2.15

Loss: $2.55 - $2.15 = $0.40

(39 X 100 X $.40) = $1,560 or 15.68%

To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.

If you are uncertain on how to execute an options spread, please watch my training video by clicking here.

The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.

Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.

Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.

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