Is it Time to Bet on DDOG's Next Leg Lower?

Breaking down why DDOG could be a good play for option bears

Jun 9, 2021 at 2:35 PM
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Software name Datadog Inc (NASDAQ:DDOG) is seeing multiple levels of pressure on the charts. A familiar ceiling at the $95 level appears to be keeping a lid on the shares, while an influx of calls at the June 95-strike could also act as resistance in the coming weeks. The 20-week moving average has also been a significant trendline of resistance in the past, and the stock is currently just below it. With these technical layers in place, DDOG appears to be on track to add to its 10.2% year-to-date deficit.
datadog jun 9
Analysts are leaning bullish on the equity, leaving little room for a round of upgrades and plenty of space for a shift in sentiment that could push the stock lower. Of the 19 analysts in coverage, 11 carry a "buy" or better rating on DDOG, while eight recommend a tepid "hold," with not a "sell" or worse in sight. Plus, the 12-month consensus price target of $108.33 is an 22.5% premium to current levels.


Lastly, Datadog stock is sporting attractively priced premiums at the moment, too. The stock's Schaeffer's Volatility Index (SVI) of 46% stands higher than just 4% of all other readings from the past year. What’s more, its Schaeffer's Volatility Scorecard (SVS) sits at a relatively high 81 out of a possible 100, indicating that the stock has managed to exceed these volatility expectations over the last 12 months.

Our recommended put contract has a leverage ratio of -6.1, and will double on a 13.9% decline in the underlying security.
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