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Quantchabot has detected a promising Bull Put Spread trade opportunity for COSTCO WHOLESALE (COST) for the 28-Feb-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
COST was recently trading at $316.12 and has an implied volatility of 16.44% for this period. Based on an analysis of the options available for COST expiring on 28-Feb-2020, there is a 34.14% likelihood that the underlying will close within the analyzed range of $316.39-$328.19 at expiration. In this scenario, the average linear return for the trade would be 56.56%.
52 week high: COSTCO WHOLESALE recently reached a new 52-week high at $316.94. COST had traded in the range $205.75-$314.28 over the past year.
Trade approach: Reaching a new 52-week high is a bullish indicator, so this trade is designed to be profitable if COST maintains its current direction and does not revert back to pricing on the bearish side of $316.12 on 28-Feb-2020. If possible, the trade has been padded such that slight movement against the trade would still return a profit.
Upside potential: Using this bullish strategy, the trade would be profitable if COSTCO WHOLESALE closes at or above $315.65 on 28-Feb-2020. Based on our risk-neutral analysis, there is a 52.54% 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.