DraftKings stock has broken out of a series of lower lows
Sports betting concern DraftKings Inc (NASDAQ:DKNG) is breaking above resistance after finding support at the 40-day moving average. In addition, the equity's $20 billion market cap has also been an area of support, making now the perfect time to bet on DKNG's next move higher.
While the brokerage bunch is leaning overwhelmingly bullish on DraftKings stock at the moment, there is still plenty of room for upgrades moving forward, as more states allow sports gambling. In fact, 16 of 23 in coverage rate the security a "buy" or better, while seven say "hold" or worse.
Short interest is rolling over from November 2019 all-time highs. Short interest has fallen 1.1% in the most recent reporting period, and the 17.83 million shares sold short represent a healthy 5.7% of the stock's available float.
A shift in the options pits may also keep wind at the security's back. This is per DKNG's Schaeffer's put/call open interest ratio (SOIR), which sits higher than 87% of readings in its annual range, suggesting short-term option players have rarely been more put-biased during the past year.
Lastly, DKNG premiums look extremely attractive at the moment, according to its Schaeffer's Volatility Index (SVI) of 79%. That ranks in the low 11th percentile of its annual range. Additionally, the security's Schaeffer's Volatility Scorecard (SVS) stands at an extremely high 97 out of 100, meaning DraftKings stock has exceeded options traders' volatility expectations during the past year. Our recommended call has a leverage ratio of 4.1, and will double in value on a rise of 24.8% in the underlying security.
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.