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Quantchabot has detected a promising Bear Call Spread trade opportunity for SMILEDIRECTCLUB INC. (SDC) for the 21-Feb-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
SDC was recently trading at $13.68 and has an implied volatility of 97.16% for this period. Based on an analysis of the options available for SDC expiring on 21-Feb-2020, there is a 34.14% likelihood that the underlying will close within the analyzed range of $12.00-$13.68 at expiration. In this scenario, the average linear return for the trade would be 62.65%.
Big -10.76% Change: After closing the last trading session at $15.33, SMILEDIRECTCLUB INC. opened today at $14.58 and has reached a low of $13.37.
Trade approach: A movement as big as -10.76% is a significantly bearish indicator, so this trade is designed to be profitable if SDC maintains its current direction and does not revert back to pricing on the bullish side of $13.68 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 SMILEDIRECTCLUB INC. closes at or below $13.70 on 21-Feb-2020. Based on our risk-neutral analysis, there is a 50.34% 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.