Options Traders Bet Big on DraftKings Stock After Giant Deal

The equity just notched a new all-time high

Deputy Editor
Sep 16, 2020 at 10:20 AM
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Online sports and gambling concern DraftKings Inc (NASDAQ:DKNG) is red-hot this morning. The company secured another sports partnership, becoming the exclusive operator of sports betting, iGaming, and daily fantasy sports for the National Football League's (NFL) New York Giants. Financial terms of the deal were omitted, but the new deal marks the third of such caliber as DraftKings also has daily fantasy sports agreements with the NFL's Dallas Cowboys and New England Patriots. As a result, DKNG is up 6.3%, last seen trading at $51.26.

DraftKings stock notched a new all-time high of $52.45 out of the gate this morning. DKNG boasts an impressive year-to-date rise of 386.9%, with support emerging at the shares' ascending 80-day moving average. 

In the options pits, calls are highly preferred. This is evident by the 172,969 calls picked up during the last days compared to just 20,593 puts at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Echoing this, 10 of the 13 analysts covering DKNG consider it a "strong buy," while the remaining three are saying "hold."

Today's options pits are seeing some notable call activity taking place as well. At last check, 83,000 calls have crossed the tape -- volume that is six times the intraday average amount and pacing for the highest percentile of its annual range. Most popular is the September 55 call, followed by the 50-strike call from the same series, with new positions being opened at the former.

Options look like a good way to go. DKNG's Schaeffer's Volatility Index (SVI) of 89% sits higher than just 19% of readings in its annual range, suggesting short-term options are pricing in relatively low volatility expectations. Simply put, the equity's near-term options are attractively priced at the moment.

 

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