Weekend Trader Series
December 24, 2023
Open Positions Update
- Please extend the scheduled time-stop date on the XPO Inc. (XPO) February 16, 2024, 77.50-strike call to Monday, January 8.
The following is this week's recommendation:
DraftKings (DKNG)Place a limit order to buy the DraftKings (DKNG) February 16, 2024 34-strike call at a limit price within range of the current market asked price when you place your order. At the close on Friday, December 22, this option was offered at $4.05. DKNG closed at $35.72 on Friday, December 22.Do not attempt to enter this position after Tuesday's close.Please use the following guidelines to manage the position:- Exit the position if the option is at a 100% gain from your entry price.
- If the option has not reached its target profit by 3:00 p.m. Eastern time on Monday, January 22, close the position.
- If there is a change to the above closeout parameters, we will notify you in your regular Sunday evening communication.
Sports betting name DraftKings (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 34 call has a leverage ratio 5.7, and will double on an 18% jump in the underlying shares.
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