Several Support Levels in Place for DraftKings Stock

Shorts are currently in covering mode

Dec 28, 2023 at 1:56 PM
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Subscribers to Schaeffer's Weekend Trader options recommendation service received this DKNG commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

Sports betting name DraftKings Inc (NASDAQ:DKNG) had a stellar 2023, topped off with a two-year high back in November. The shares are now pulling back to potential support at the $34 region, which is a 38.2% Fibonacci retracement of its all-time highs and 2022 lows. Additionally, the security has tripled its 2022 close, coinciding with the site of its early August post-earnings high and rising 50-day moving average.

It’s also worth noting shorts are in covering mode, despite a buildup in short interest from October to early November. There is still plenty of pessimism left to unwind, however, since 5.6% of the security’s available float sold short. There’s still room for upgrades, too, with eight of 33 analysts in coverage rating DraftKings stock a tepid "hold."

Our recommended February call has a leverage ratio 5.7, and will double on an 18% jump in the underlying shares.

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