Can DoorDash Reach All-Time Highs? Option Analysis

DoorDash Inc DASH posted an earnings beat after-hours on Tuesday, rallying an impressive 25% an hour after the earnings were reported.

What Happened: While there was a mild pullback on Wednesday, this Thursday has seen the stock rally again, albeit on lower volume. The stock is up more than 7% this Thursday and is holding near the daily highs on slightly above-average volume trading 4.6 million shares versus the 10 day average of 3.9 million, so the stock is still enjoying a bid two days after the earnings release.

On the options front, before Thursday, there were 80,000 calls and 92,000 puts for a total of 172,000 options. On Thursday, options traders have posted 69,000 options with 48,000 of them being calls and 21,000 puts (image below).

This translates into 7 out of 10 options being calls, which suggests option traders are still bullish on DoorDash.

Why It Matters: Before Thursday's options, about 41% of them were expiring this Friday which by itself could cause a pullback in the stock as we get closer to the expiry. The largest strikes by volume today are $225 and $230, which is where DoorDash has been spending most of the day between. Yet, volumes decline massively above $240, suggesting option traders may have little appetite for prices beyond that (image below).

What's Next: With the combination of 40+% of the options rolling off tomorrow, plus the low volume of short-dated flows above the $240 strike, options traders may start to take profit absent any strong buying later today or early tomorrow. This could manifest in a pullback towards the $225 strike where strong volume is coming in at.

Looking ahead to the Nov. 19 expiry, the largest strike by volume is $230, which may become a "pin" or support level to start next week.

Photo: Courtesy DoorDash