I am looking at the Draftkings (Ticker: DKNG) stock chart and I see a doji in Friday’s candle formation.
This could be signaling the end of this downtrend that started on Sept. 10 after trading a high of $64.50.
I am also seeing short term support at this level. DKNG closed on Friday at $51.33.
Looking at the options, I like the Oct. 15 expiration and I like the idea of a vertical spread to keep my initial outlay lower.
- If DKNG opens and trades higher on Monday, I will buy the Oct. 15 52-strike calls with an implied volatility of 50.73 and sell the Oct.15 59 calls with a slightly higher IV of 51.13.
- I would pay $1.75-$1.80 for the Oct.15 52/59 call spread. It has 21 days until expiration and it is seven points wide. I think DKNG can trade back up to $59.
- I will take my losses if the spread trades down to about $1.20. I will begin profit taking around $2.90-$3.00.
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Thanks for Reading … See You Next Tuesday!