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Quantchabot has detected a promising Short Risk Reversal trade opportunity for SPECTRUM PHARMACEUTICALS (SPPI) for the 21-Feb-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
SPPI was recently trading at $4.01 and has an implied volatility of 121.34% for this period. Based on an analysis of the options available for SPPI expiring on 21-Feb-2020, there is a 34.14% likelihood that the underlying will close within the analyzed range of $2.51-$4.02 at expiration. In this scenario, the average linear return for the trade would be 55.43%.
Big -54.17% Change: After closing the last trading session at $8.75, SPECTRUM PHARMACEUTICALS opened today at $3.87 and has reached a low of $3.61.
Trade approach: A movement as big as -54.17% is a significantly bearish indicator, so this trade is designed to be profitable if SPPI maintains its current direction and does not revert back to pricing on the bullish side of $4.01 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 SPECTRUM PHARMACEUTICALS closes at or below $4.50 on 21-Feb-2020. Based on our risk-neutral analysis, there is a 59.43% 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.