DraftKings stock pulled back to a historically bullish trendline
Shares of DraftKings Inc (NASDAQ:DKNG) were last seen down 3.9% at $39.99, after the sports betting giant closed on its senior secured Term Loan B credit facility for an increased $600 million -- up from the initially announced $500 million on the heels of higher demand.
The stock is now trading below its 126-day moving average, after spending a considerable amount of time above it. Specifically, DKNG had traded north of this trendline 80% of the time in the past two months and in eight of the last 10 sessions. Historical data from Schaeffer's Senior Quantitative Analyst Rocky White suggests that similar signals in the past three years resulted in a 75% win rate, with the stock averaging an 18.94% gain over the following month.
A comparable move from current levels could push DraftKings stock back above $47.50, reclaiming its year-over-year breakeven mark. Despite today’s pullback, the stock remains up 7.7% in 2025.
Options traders may want to take note of shifting sentiment. The 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 97th percentile of readings over the past year, indicating a heavier-than-usual preference for puts.
Meanwhile, short sellers are increasing their bets. Short interest jumped 21.6% in the latest reporting period, with 26.92 million shares sold short, representing 5.7% of DKNG’s available float. At the stock’s average pace of trading, it would take nearly three days for shorts to cover their positions.
Now could be an opportune time to speculate on DKNG’s next move via options. Schaeffer’s Volatility Index (SVI) of 50% sits in the relatively low 17th percentile of annual readings, suggesting options traders are currently pricing in lower volatility expectations -- a potential advantage for those looking to initiate new bullish bets.