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Quantchabot has detected a promising Long Risk Reversal trade opportunity for PULTEGROUP (PHM) for the 17-Jul-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
PHM was recently trading at $29.48 and has an implied volatility of 57.39% for this period. Based on an analysis of the options available for PHM expiring on 17-Jul-2020, there is a 34.13% likelihood that the underlying will close within the analyzed range of $29.51-$38.63 at expiration. In this scenario, the average linear return for the trade would be 67.28%.
Big 8.24% Change: After closing the last trading session at $27.24, PULTEGROUP opened today at $28.99 and has reached a high of $29.66.
Trade approach: A movement as big as 8.24% is a significantly bullish indicator, so this trade is designed to be profitable if PHM maintains its current direction and does not revert back to pricing on the bearish side of $29.48 on 17-Jul-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 PULTEGROUP closes at or above $29.22 on 17-Jul-2020. Based on our risk-neutral analysis, there is a 51.48% 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.