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Quantchabot has detected a promising Bull Put Spread trade opportunity for VALE (VALE) for the 8-May-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
VALE was recently trading at $8.69 and has an implied volatility of 54.31% for this period. Based on an analysis of the options available for VALE expiring on 8-May-2020, there is a 34.14% likelihood that the underlying will close within the analyzed range of $8.69-$9.48 at expiration. In this scenario, the average linear return for the trade would be 34.17%.
Big 7.15% Change: After closing the last trading session at $8.11, VALE opened today at $8.27 and has reached a high of $8.77.
Trade approach: A movement as big as 7.15% is a significantly bullish indicator, so this trade is designed to be profitable if VALE maintains its current direction and does not revert back to pricing on the bearish side of $8.69 on 8-May-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 VALE closes at or above $8.69 on 8-May-2020. Based on our risk-neutral analysis, there is a 50.05% 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.