Invest in This Sports Betting Stock During Market Downturns

DraftKings (DKNG) has experienced volatility since its two-year high on March 27th, with a 2.8% drop post-earnings on May 3rd exacerbating the situation. Currently trading at $42.42, down 3.3% and on track for its fourth loss in five days, there is a positive aspect to this pullback as it has brought the stock close to a historically bullish trendline.

The stock has approached its 80-day moving average, trading above this trendline 80% of the time in the past two months and in eight of the last 10 trading days. This has only happened four other times in the past three years, with the stock higher one month later in three of those instances, averaging an 8.9% return. A similar move would bring the shares back above breakeven for the quarter and continue the trend of higher highs seen in the last year.

Additionally, options for DKNG are currently priced affordably. The stock’s Schaeffer’s Volatility Index (SVI) is at 38%, ranking in the low 3rd percentile of its annual range. This means that options traders are expecting low volatility in the near future.

In summary, while DKNG has faced some turbulence recently, there are positive indicators that suggest a potential rebound. The stock’s proximity to a historically bullish trendline, along with affordable options pricing, may present an opportunity for investors.