DraftKings Stock Drops the Ball Despite Revenue Beat

DKNG options are flying off the shelves today

Assistant Editor
Aug 14, 2020 at 10:10 AM
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Online sports and gambling concern DraftKings Inc (NASDAQ:DKNG) is down 9% at $32.78 this morning, after the online gambling company reported second-quarter losses of 55 cents, well above analysts' estimates of 19 cents. Meanwhile, DraftKing's revenue and forecast for current-quarter revenue came in well above Wall Street's estimates. This bodes well for the company, considering the a limited sports calendar due to the coronavirus pandemic. 

DraftKings stock is still well off its June 2 all-time high of $44.79, but boasts an impressive year-over-year rise of 268.6%. Plus, today's pullback is so far being contained by the shares' 80-day moving average, a trendline that has not been breached on a closing basis since early April.

It's unsurprising then that the options pits are rife with bullish activity. In fact, in the last 10 weeks, 3.60 calls have been bought for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Plus, DKNG's Schaeffer's put/call open interest ratio (SOIR) of 0.14 suggests short-term options traders are targeting calls over puts of late at a higher-than-usual clip.

Today's options pits are seeing some notable put activity is taking place. At last check, 23,000 calls have crossed the tape and 11,000 puts have been exchanged in the first hour of trading -- total options volume that is five times the intraday average amount and volume pacing for the highest percentile of its annual range. Most popular is the weekly 8/14 35-strike call, while new positions are also being opened at the weekly 8/14 35-strike put.

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