DKNG has some intriguing short squeeze potential
The shares of DraftKings Inc. (NASDAQ: DKNG) are in focus this morning, as fellow sports betting company Penn National (PENN) dives further into the online gambling scene. At last check, DKNG was up 0.4% to trade at $48.85, ahead of the company's second-quarter earnings report, slated for tomorrow before the market opens.
Options traders are kicking into high gear ahead of the event. So far, 6,214 calls and 6,792 puts have crossed the tape -- five times the average intraday amount. The most popular contract is the weekly 7/23 210-strike put, followed by the 200-strike put in the same weekly series, with positions being opened at the latter.
DraftKing's stock has carved out a channel of lower highs since its March 22 record peak of $74.38. The shares are down 6.7% this quarter alone, with their 80-day moving average keeping a tight lid on any breakouts. The equity's year-to-date breakeven will be an area to watch this week, too.
There's some decent short-covering potential with DKNG that could help it topple some of the resistance that has gathered. Short interest is off by 4.7% in the most recent reporting period, yet the 28.82 million shares sold short accounts for a healthy 8.6% of the stock's total available float.
DKNG has a mixed history of post-earnings moves, with positive returns after three of its five reports, including a 6.4% pop back in February. DKNG has averaged a next-day swing of 7.7% during this time period, regardless of direction. This time around, the options pits are pricing in a much bigger move of 9.2%.