Posted on April 8, 2021
We’re walking up and down Rush Street Interactive (NYSE:RSI) today, in a move that bucks against all our better instincts.
There’s almost nothing predictable from a stock like that, and the likelihood of it rocketing higher – or bottoming out completely – is about equal.
That said, we’ve decided to venture in the slipstream with this newfound gambling platform, and let the risks be damned!
Well, we start with a (circumspect) look at the company’s fundamentals – such as they are:
And it’s that winning trio that’s produced a fairly sizeable short position on the stock, which, in itself, presents a danger to those, like us, expecting additional downside.
But it’s really the technical picture that convinced us the time is ripe to act on this wounded puppy, and to expect a measured decline in the months ahead.
Have a look –
The breakdown’s like this –
All of which points us toward the following trade –
A Jew and His Gold recommends you consider setting the RSI July 16th 20 synthetic short* for a debit of $4.75 (1.35/6.10). Set a STOP buy on the shares at $20.
[*Sell the 20 CALL and buy the 20 PUT.]
Rationale: With the current price of the stock at $15.53, our breakeven arrives at $15.25 (after a decline of just 1.8%).
Maximum gain on the trade is unlimited.
Maximum loss is limited to our initial debit of $4.75 – with proper STOPs in place.
Remember, should the STOP be triggered (an eventuality we deem far-fetched under current market conditions, as price would have to rise an unlikely 30%), you should reset a STOP sell at the same $20 level. That will keep the trade square. And if that STOP is triggered, you’ll have to reset the STOP buy again at $20. And so on…
Many happy returns,