The automated Quantcha Trade Ideas Service has detected a promising Bear Put Spread trade opportunity for SPDR S&P BIOTECH (XBI) for the 9-Jun-2017 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
XBI was recently trading at $67.67 and has an implied volatility of 22.90% for this period. Based on an analysis of the options available for XBI expiring on 9-Jun-2017, there is a 32.32% likelihood that the underlying will close within the analyzed range of $65.21-$67.66 at expiration. In this scenario, the average linear return for the trade would be 81.79%.
Trending on StockTwits: StockTwits® is a financial communications platform for the financial and investing community. On their site, SPDR S&P BIOTECH was recently trending, indicating that breaking news and/or market activity has significantly impacted sentiment toward the stock. This movement can be interpretted as a sign of more near-term price movement for the underlying.
Trade approach: The recent sentiment change in XBI on StockTwits appears to be moderately negative, indicating that the stock is likely to follow in that direction for investors trading on sentiment. As a result, a bearish strategy could prove effective if the sentiment ultimately turns out to drive trading.
Upside potential: Using this bearish strategy, the trade would be profitable if SPDR S&P BIOTECH closed at or below $67.73 on 9-Jun-2017. Based on our analysis, there is a 49.26% likelihood of this return.
Downside risk: As with any options trade, there is a substantial downside risk where you may lose most or all of your investment.
To analyze this trade in depth, please visit the Quantcha Options Search Engine.
This is an automated post generated based on a market analysis of delayed data at 5/30/2017 12:30:14 PM ET. The analysis does not include brokerage fees or commissions and is not investment advice.