Options Bulls Bet Big on Fantasy Football Stock Before Earnings

The equity is within striking distance of its all-time highs

Digital Content Manager
May 13, 2020 at 12:00 PM
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Online sports and gaming name DraftKings Inc (NASDAQ:DKNG) is barreling towards a new all-time closing high today, up 4.2% at $27.40, after billionaire investor George Soros disclosed a stake in the company last night. The surge comes two days ahead of DraftKings' first-quarter earnings report, due out on Friday, May 15.

The fantasy football concern has charged up the charts in its short time as a publicly traded company, hitting an all-time high of $28.15 yesterday, guided higher by its ascending 10-day moving average. This will be DraftKings' first earnings report since going public in mid-April, following the approval of a reverse merger with Diamond Eagle Acquisition in a deal valued at $2.7 billion. Ahead of the event, the options market is pricing in a 20.4% move for Friday's trading, regardless of direction.

DKNG May 13

Options bulls are jumping on the digital gaming stock today, with call volume running in the 99th percentile of its annual range. So far, 39,000 calls have exchanged hands, triple the amount typically seen at this point and almost eight times the number of puts traded. The May 30 call is by far the most popular, while the July 30 call is also seeing plenty of action today. 

This bullish behavior appears to be the norm for options players, with 70,812 calls picked up during the last 10 days, compared to 10,496 puts. Echoing this, all four analysts covering DKNG consider it a "buy" or better. Though its 12-month consensus price target of $24.24 is an 11% discount to current levels, which could lead to some price target hikes should the equity fare well post-earnings.

 

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