Food delivery service DoorDash (DASH) soared last week following a strong earnings report. One trader expects shares to trend higher in the months ahead.
That’s based on the February 2024 $70 calls. With 102 days until expiration, 52,015 contracts traded compared to a prior open interest of 165, for a massive 315-fold jump in volume on the trade. The buyer of the calls paid $21.25 to make the bullish bet.
DoorDash jumped to over $87.50 after earnings, making the calls about $17.50 in-the-money. That leaves less than $4 of time value on the option trade.
Shares hit a 52-week high over $92.50 back in the summer before selling off, so there’s likely some more upside room ahead.
DoorDash is clearly volatile, but shares are up over 60 percent in the past year. The company’s solid earnings report and 27 percent increase in revenue shows that they’re firing on all cylinders.
Action to take: Investors may like shares here, as the stock likely has more short-term upside ahead. DoorDash is still a ways off from being consistently profitable, so there’s no dividend payment for investors.
For traders, the February calls are massively in-the-money, making them a safe way to play further upside at a lower cost than buying shares outright. The options can likely see low-to-mid double-digit gains from here. Look to take profits if the rally starts to stall.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.