Signal Says Buy the Dip on DraftKings Stock

The equity has a chance to reclaim its 2023 highs

Deputy Editor
Aug 31, 2023 at 2:37 PM
facebook X logo linkedin


This commentary first appeared on Forbes Great Speculations on Wednesday, August 23, where Schaeffer's Investment Research is a regular contributor.

The shares of sports betting company DraftKings Inc (NASDAQ:DKNG) were last seen 3.4% higher at $28.16, as part of the broader tech sector rally today. Today's climb could be the beginning of a rebound, given the equity's recent placement near a historically bullish trendline.

Specifically, DKNG in the last week pulled back to its 80-day moving average after spending a significant period of time above it. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, five similar signals occurred during the past three years, with DraftKings stock notching a 14.6% one-month gain 80% of the time. From its current perch, a similar move would put the equity back near its Aug. 4, year-to-date high of $34.49

DKNG Chart August 232023

The equity is underperforming even the SPDR S&P 500 ETF Trust’s (SPY) 3.4% monthly dip, with DKNG down 11.3% in August. Given this lackluster technical setup, it’s no surprise short-term options traders are more pessimistic than usual. However, an unwinding of this pessimism could bode well for DraftKings stock; its Schaeffer’s put/call open interest ratio (SOIR) of 1.06 stands higher than 88% of reading from the past year.

Now looks like a good time to weigh in on DKNG’s next move with options. Its Schaeffer's Volatility Index (SVI) of 49% stands in the low 11th percentile of annual readings, implying options players are pricing in relatively low volatility expectations at the moment.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI