Option Advisor Subscribers Scored a Profit with DoorDash

Investors closed their positions before a post-earnings dip

Deputy Editor
Feb 21, 2024 at 3:13 PM
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Subscribers to our monthly Option Advisor service doubled their investments with our DoorDash Inc (NASDAQ:DASH) April 100 call recommendation, made on Jan. 26. At the time, the food delivery name had cleared its $102 initial public offering (IPO) price, following a run up to it in mid-December, and a positive earnings surprise in November.

Plus, Uber (UBER) was set to report results before DoorDash, which we noted could provide a potential halo lift that indeed happened, with DASH adding 1.8% on Feb. 7. Furthermore, analysts were conservative, with more than 50% of the covering firms sporting a "hold" or worse rating.

Shares were trading at multi-year highs, yet short sellers had been in covering mode since the start of the year, and the amount of bearish bets represented over three days of pent-up buying power, at DASH's average pace of trading. Lastly, December options were the cheapest across the stock's term structure. 

The stock staged a sharp post-earnings drop on Feb. 16, but we had already closed our position. Our subscribers doubled their investment and exited their positions on Feb. 15, when DASH hit an all-time peak. 

DASH Feb21

 

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