Oil Stock Straddle Yields Profits Before Crude Prices Soar

The stock shed more than 45% in August

Deputy Editor
Sep 13, 2023 at 1:14 PM
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Last week, Schaeffer's Volatility Trader subscribers more than doubled their money with our DigitalOcean Holdings Inc (NYSE:DOCN) September 35 straddle. Below, we'll dive into the technical landscape that led to this recommendation.  

At the time of the recommendation on Aug. 15, DigitalOcean stock was contending with a sticky spot at the $35 level. That area also represented a 50% gain off its all-time lows, as well as its $3 billion market value.

DOCN Chart September 132023

What's more, the shares sold short accounted for 22% of DOCN's available float. Options bettors entered at a good time, too, as DigitalOcean stock boasted affordably priced premiums. This was according to its Schaeffer's Volatility Index (SVI) that sat in the lowest possible percentile of annual readings, which hinted at extremely low volatility expectations being priced in. 

Our Volatility Trader subscribers entered the trade on Tuesday, Aug. 15. After a dismal August in which DOCN lost 45.4%, the equity is looking to roar back to life as oil prices hover near annual highs; however, we closed the position on Thursday, Sept. 7, allowing subscribers to cash in a 114% profit. 

 

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