Tuesday, August 31, 2021
Happy Thankful Tuesday!
I am excited to share that you don’t need special education or to sit in front of the computer all day to trade options. It can be easily learned if you are interested in spending an hour or so a week earning money in what could be considered “renting” stocks for a short period of time.
This is why I show you the details about an equity’s symbol and pattern each week.
I am typing this on Sunday, before the new week starts. Last week, the Dow was up 4 days out of 5. The S&P and Nasdaq hit new highs and the Dow lagged a bit, not quite making it to that point.
For the updates on previously discussed symbols, please scroll down.
For today’s Trade of the Day, we will be looking at DraftKings, Inc. symbol (DKNG)
Before analyzing DKNG’s chart, let’s take a closer look at the company and its services.
DraftKings Inc. operates as a digital sports entertainment and gaming company in the United States. It operates through two segments, Business-to-Consumer and Business-to-Business. The company provides users with daily sports, sports betting, and iGaming opportunities. It is also involved in the design, development, and licensing of sports betting and casino gaming platform software for online and retail sportsbook, and casino gaming products. The company distributes its product offerings through various channels, including traditional websites and direct app downloads, as well as direct-to-consumer digital platforms.
DraftKings Inc. was founded in 2011 and is headquartered in Boston, Massachusetts.
Each candle on the chart represents price movement over a 5-day (week) period. The indicator at the bottom of the chart is a Channel Commodity Index (CCI). I drew a line below the candles, if price stays above that line, the upward trend should continue. Watch for a continued rise toward its target.
A cross down through the CCI zero or -100 line is bearish, in that it is suggesting price has gone from bearish to even more bearish. A cross up through the zero line and a cross through 100, suggests price is bullish. If you want to learn more about the CCI, you can read through the short section below or you can scroll down to the alert signal.
Channel Commodity Index
A cross up and over the CCI -100 or the zero line can issue an entry signal as it moves from being bearish to bullish. A rise toward 100 is a continuation of that bullishness. Up through the 100 line creates a green fin of bullishness, until it drops back down through the 100-line.
Also, a pullback and then, as it heads back up is another bullish indicator.
A break below the zero line means it has gone from bullish to bearish and a drop below -100 suggests even more bearishness.
The Commodity Channel Index (CCI) is a versatile indicator that can be used to identify a new trend or warn of extreme conditions. Originally, it was developed to identify cyclical turns in commodities, but the indicator can be successfully applied to indices, ETFs, stocks and other securities. In general, CCI measures the current price level relative to an average price level over a given period. CCI is relatively high when prices are far above their average but is relatively low when prices are far below their average. In this manner, CCI can be used to identify overbought and oversold levels or breaks from one level to another.
Check Out How This Rise in Price Could Pay Out Big Time
DKNG is bullish as it rises further above the 100 line. This week’s candle is apt to continue its upward movement that could take it higher. We are looking for a continued rise up through the CCI 100 line and up to a price of $61 and then higher. The target is $66.
If you find that you like the CCI Indicator as an easy-to-read indicator, it is included in the 5-Star Academy educational program which includes a chatroom where I am during the day to do live teaching sessions on M-W-F and to answer questions during the day. It is an incredibly supportive community.
Potential Profit Play for DKNG
DKNG’s price continues to move up. I am writing this on Sunday, if price continues to rise above 61 when you receive this on Tuesday, you could consider a call option trade. We are expecting the CCI indicator to continue rising further above the 100 line.
Price is currently at approximately $60 as I write over the weekend and is expected to continue heading up to 61, perhaps, hitting the target of $66 and then higher.
If the CCI line stays above the 100 line and then, continues up, price will continue its current uptrend and continue to rise. We will keep an eye on it over the course of the next few weeks.
The short-term price target for DKNG is $66 and, perhaps, higher.
To buy shares of DraftKing (DKNG) stock today would cost approximately $61 per share.
I am suggesting that the price of DKNG may rise to $66.
Option trading offers the potential of a lower initial investment and higher percentage gain. It is like renting stock versus buying out right. Let’s take a look.
If you bought 10 shares of DKNG at $61, total investment $610 and it increased in price to $66, it would result in a profit of $5 or $50 for 10 shares or an 8% gain.
If you bought one Call option contract covering 100 shares of DKNG’s stock with a September 17th (Sept 21) expiration date for the 66 strike, the premium would be approximately .93 per share or a total of $93 for the contract of 100 shares. If price increased the expected $5 over the next few weeks to $66 target, the premium would increase approximately $3.00 to $3.93. This is a gain of $300 on your $93 investment or 309% profit. That would be a terrific trade!
It is exciting to make money if price rises or falls.
I want to remind you that you can sell to close and take profit any time along the line before the expiration date. You don’t have to hold the contract until expiration.
Options often offer a smaller overall investment, covering more shares of stock and potential for greater profits. This is like renting stocks versus having to pay full price to buy.
This said, if you are having any kind of trouble taking advantage of these trades, we don’t want you to miss out. I have put together programs that help traders just like you access the potential profits that options provide. Be sure to check out the programs (like 5-Star Academy mentioned earlier) shared in this email and we will make it easy for you to get your share.
I love to trade, and I love to teach. It is my thing.
Yours for a prosperous future,
PS-I have created this daily letter to help you see the great potential you can realize by trading options. Being able to recognize these set ups are a key first step in generating wealth with options. Once you are in a trade, there is a huge range of tools that can be used to manage the many possibilities that can present themselves. If you are interested in learning how to apply these tools and increase the potential of each trade, click here to learn more.
Previous Equities discuss:
Last week, we discussed Merck (MRK) and a Sept 10th expiration (Sept 2 wk) 82 strike and a premium of .47. MRK headed down Monday and continued every day during the week, so no trade developed. This is a good example why it is important to check the current chart rather than the one I post that is over the weekend or two days before you receive it. (click here to read the article)
Would love to learn more