The automated Quantcha Trade Ideas Service has detected a promising Short Risk Reversal trade opportunity for NL INDUSTRIES (NL) for the 16-Feb-2018 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
NL was recently trading at $13.15 and has an implied volatility of 109.08% for this period. Based on an analysis of the options available for NL expiring on 16-Feb-2018, there is a 34.14% likelihood that the underlying will close within the analyzed range of $8.38-$13.28 at expiration. In this scenario, the average linear return for the trade would be 71.94%.
Big -7.72% Change: After closing the last trading session at $14.25, NL INDUSTRIES opened today at $14.20 and has reached a low of $12.73.
Trade approach: A movement as big as -7.72% is a significantly bearish indicator, so this trade is designed to be profitable if NL maintains its current direction and does not revert back to pricing on the bullish side of $13.15 on 16-Feb-2018. If possible, the trade has been padded such that slight movement against the trade would still return a profit.
Upside potential: Using this bearish strategy, the trade would be profitable if NL INDUSTRIES closes at or below $14.70 on 16-Feb-2018. Based on our risk-neutral analysis, there is a 58.72% 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 12/6/2017 12:00:26 PM ET. The analysis does not include brokerage fees or commissions and is not investment advice.