Quantcha now offering unlimited commission-free options trading.
Quantchabot has detected a promising Short Risk Reversal trade opportunity for BIOHAVEN PHARMACEUTICAL HOLDING CO LTD (BHVN) for the 21-Feb-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
BHVN was recently trading at $46.06 and has an implied volatility of 169.04% for this period. Based on an analysis of the options available for BHVN expiring on 21-Feb-2020, there is a 34.14% likelihood that the underlying will close within the analyzed range of $34.28-$46.08 at expiration. In this scenario, the average linear return for the trade would be 49.74%.
Big -10.14% Change: After closing the last trading session at $51.25, BIOHAVEN PHARMACEUTICAL HOLDING CO LTD opened today at $45.89 and has reached a low of $45.50.
Trade approach: A movement as big as -10.14% is a significantly bearish indicator, so this trade is designed to be profitable if BHVN maintains its current direction and does not revert back to pricing on the bullish side of $46.06 on 21-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 bearish strategy, the trade would be profitable if BIOHAVEN PHARMACEUTICAL HOLDING CO LTD closes at or below $46.65 on 21-Feb-2020. Based on our risk-neutral analysis, there is a 51.66% 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.