There's a pretty good Head & Shoulders on the Daily/Weekly for $DKNG. The right shoulder is surprisingly similar in structure to the left shoulder.. a peak, trough, then lower high. Neckline is a little bit dirty, but then again its COVID so not a lot of us are shaving regularly :)
Today saw a nice spike which MAY be the real move (news that they are launching gift cards for the holidays), or it may be a fake out- which is what I am hoping for. Either way this will be making big move shortly. My hopes is we end the day with a big upper wick/shadow and start TODAY.
The expectation would be a drop below the lower Bollinger Band and ride it down there mostly like a diagonal escalator, as seen previously. $40 is a nice price to hope for.
Options
IV30 Percent Rank is 10% today. Very low and subdued. Meanwhile term structure saw some signs of the beginning of Backwardation- in other words, the nearest expirations 12/18, 12/24 saw an increase in IV, while the mid-terms remained the same and the far-terms actually declined some. What this means is that the tail is starting to wag.
So how do we play this from an options viewpoint?
The 1/15/21 and 2/19/21 expirations have decent option chains, with Earnings expected to be about 2/11/21.
If IV rises significantly and you are strictly long puts, you have a great opportunity if this does make a significant move down as the shares are already Hard To Borrow. On stocks that are HTB if there's enough pressure they can run out of available shares to short or have such outrageous borrowing fees that the premium on Puts grows very high.
Though there isn't much to be gained from selling calls for credits- IV is so low, I have opened some Bear Credit Spreads to offset the cost of Bear Debit Spreads. Theoretically speaking, you're offsetting your loss if this stocks..does nothing. If it moves sideways, the loss on the debit of the Puts are largely reduced.
Good luck and happy trading.
Today saw a nice spike which MAY be the real move (news that they are launching gift cards for the holidays), or it may be a fake out- which is what I am hoping for. Either way this will be making big move shortly. My hopes is we end the day with a big upper wick/shadow and start TODAY.
The expectation would be a drop below the lower Bollinger Band and ride it down there mostly like a diagonal escalator, as seen previously. $40 is a nice price to hope for.
Options
IV30 Percent Rank is 10% today. Very low and subdued. Meanwhile term structure saw some signs of the beginning of Backwardation- in other words, the nearest expirations 12/18, 12/24 saw an increase in IV, while the mid-terms remained the same and the far-terms actually declined some. What this means is that the tail is starting to wag.
So how do we play this from an options viewpoint?
- Long Puts
- Vertical Puts
- Long Straddles/Strangles or Debit Iron Butterflies/Condors
The 1/15/21 and 2/19/21 expirations have decent option chains, with Earnings expected to be about 2/11/21.
If IV rises significantly and you are strictly long puts, you have a great opportunity if this does make a significant move down as the shares are already Hard To Borrow. On stocks that are HTB if there's enough pressure they can run out of available shares to short or have such outrageous borrowing fees that the premium on Puts grows very high.
Though there isn't much to be gained from selling calls for credits- IV is so low, I have opened some Bear Credit Spreads to offset the cost of Bear Debit Spreads. Theoretically speaking, you're offsetting your loss if this stocks..does nothing. If it moves sideways, the loss on the debit of the Puts are largely reduced.
Good luck and happy trading.
Comment:
Felt like adding- if this is a Head and Shoulder, why am I saying it will only stop at the neckline and not keep going down? Because THIS move from the Right Shoulder to neckline appears to be easy to see and trade. Once we get at the neckline we could see it hold up just fine and be a fake out. I'm not looking to hit a Grand Slam, only get a Double.