DKNG YOLO - My final trade of the year
DKNG has been beaten to death and more in the last month due to a combination of: pipe share lockup expiration, dilution from 2nd capital raise, market panic from European COVID 2nd wave (algo selling from COVID headlines), and political volatility which came with the Dow dropping 800+ multiple days (elections and failed stimulus talks). Additionally, in anticipation of the lockup expiration too many traders piled on the easy short trade all at once.
Trade Thesis:
- Potential double bottom at $37.50 on the 1hr, need confirmation tmr.
- 1.618 fibbonaci extension converging with major support/resistance.
- RSI divergence and oversold levels under 30 for last 2 weeks.
- Decreasing volume.
- Short side was too heavy all at once which led to the unnaturally rapid drop. Many shorts were also closed this week to make up for other losses.
- Safe to say at this point no stimulus is expected until after Election Day at minimum, but more likely to be after a confirmation (sometime before inauguration).
- Dilution and insider selling likely fully priced in.
- The two largest sports betting events are a few months away (Super Bowl and March Madness)
- Online betting referendum on 3 state ballots.
- Upcoming earnings on Nov 12, prior guidance spotty not accounting for college games, etc. and positive expectations from PENN.
- PENN earnings blew estimates nearly 100%, yet it could not hold any gains for longer than a few hrs. This is reflective of the general market uncertainty and not due to specific company or sector news, which shows that fear is currently controlling the narrative.
Risks:
- Market crash - hedge with VIX and SQQQ calls, long treasury zeros.
- NFL cancelling the remainder of the season - possible but extremely unlikely.
- If holding options, could see extended consolidation on the green support line during the contested election period up to 79 days from nov 4. But ballot referendum should be enough to move.
Catalysts:
- Nov 4 Election Day (expecting contested results, but we are looking for the referendum results from ML, LA, and SD)
- Nov 12 Earnings
- Additional stimulus announcement
I believe that with the majority of selling pressure now finished, when the overall market calms down we will see the spring that has been coiled up for a month plus be released all at once. Looking for big volume with upward price action exiting current channel, further supported by short covering. Due to the rapid drop with no consolidation at any point, a technical bounce alone based on no news can be 7%-12%.
I am entering half my position today, with the rest tomorrow to avg in the potential Friday sell off before the election weekend.
Entry: $37.69 (20 Nov $50 calls / $0.65)
Stop: $34.69
T1: $47 | Daily ichimoku cloud, 1 fibonacci extension
T2: $50 | Kijun line (red base line), .786 fib line
T3: $55 | Gap fill, .5 fib line
Trade Thesis:
- Potential double bottom at $37.50 on the 1hr, need confirmation tmr.
- 1.618 fibbonaci extension converging with major support/resistance.
- RSI divergence and oversold levels under 30 for last 2 weeks.
- Decreasing volume.
- Short side was too heavy all at once which led to the unnaturally rapid drop. Many shorts were also closed this week to make up for other losses.
- Safe to say at this point no stimulus is expected until after Election Day at minimum, but more likely to be after a confirmation (sometime before inauguration).
- Dilution and insider selling likely fully priced in.
- The two largest sports betting events are a few months away (Super Bowl and March Madness)
- Online betting referendum on 3 state ballots.
- Upcoming earnings on Nov 12, prior guidance spotty not accounting for college games, etc. and positive expectations from PENN.
- PENN earnings blew estimates nearly 100%, yet it could not hold any gains for longer than a few hrs. This is reflective of the general market uncertainty and not due to specific company or sector news, which shows that fear is currently controlling the narrative.
Risks:
- Market crash - hedge with VIX and SQQQ calls, long treasury zeros.
- NFL cancelling the remainder of the season - possible but extremely unlikely.
- If holding options, could see extended consolidation on the green support line during the contested election period up to 79 days from nov 4. But ballot referendum should be enough to move.
Catalysts:
- Nov 4 Election Day (expecting contested results, but we are looking for the referendum results from ML, LA, and SD)
- Nov 12 Earnings
- Additional stimulus announcement
I believe that with the majority of selling pressure now finished, when the overall market calms down we will see the spring that has been coiled up for a month plus be released all at once. Looking for big volume with upward price action exiting current channel, further supported by short covering. Due to the rapid drop with no consolidation at any point, a technical bounce alone based on no news can be 7%-12%.
I am entering half my position today, with the rest tomorrow to avg in the potential Friday sell off before the election weekend.
Entry: $37.69 (20 Nov $50 calls / $0.65)
Stop: $34.69
T1: $47 | Daily ichimoku cloud, 1 fibonacci extension
T2: $50 | Kijun line (red base line), .786 fib line
T3: $55 | Gap fill, .5 fib line
Comment:
correction: US Election Day Nov 3rd
Trade closed: target reached:
Position avg cost $0.52
50% of position profits taken at $1.00
Holding remainder for above targets.
50% of position profits taken at $1.00
Holding remainder for above targets.
Comment:
$45 calls closed ITM.
$50 calls were rolled to Dec last week, 25% of original position size still in play.
$50 calls were rolled to Dec last week, 25% of original position size still in play.
Trade closed manually:
We have mild resistance on the daily ichimoku cloud. All DKNG positions closed, expecting market turbulence for the next 1-2 weeks. Looking for reentry in the 39-44 range.
Total profit of 260%~
Total profit of 260%~