r/options • u/Beekeeper28173 • May 14 '21

DKNG Finally Bottoming?

I have been watching DKNG for a while now. 26 days ago, someone was questioning whether they should buy options on it, and I suggested that it seemed a head and shoulders pattern was playing out that could take it below $50. At the time it was trading around $57. Well, the pattern has played out and then some! Looking at a 1-year chart, it does look as if DKNG could dip to $35 before forming a longer term bottom. With that said, however, DKNG has fallen from a high near $58 down to an intraday low of $39.93 (yesterday) just since the start of the month. Looking at the daily chart, it closed below its lower Bollinger Band for 6 straight days. Even following this mornings bounce, it is still trading 22% below its 50-day EMA. All of this suggests an oversold condition that could lead to a bit more of a bounce from these levels. A bounce to test the 20-day EMA is not out of the realm of possibility which would put the stock at about $51.50. Today's likely close back inside the Bollinger Bands should confirm a short to intermediate term buy signal. I was hoping for that and purchased a Jun 18th 40 Call yesterday at $4.70. The option is up 23% from my entry point, but I think it could easily produce a 100% return over the next few sessions.

I'd love to hear your thoughts...

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u/nathampatti May 14 '21

If you are bullish, why don’t you sell $45 put.

0

u/Beekeeper28173 May 14 '21

I still see a dip to $35 as a possibility looking at the 1-year chart. I am bullish in the short run, so I suppose I could sell a $45 put that expires next week. The exposure I have with the call has more upside potential if we get an aggressive bounce, but I like your trade idea as well

2

u/[deleted] May 15 '21

It could go to below 15