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Quantchabot has detected a promising Long Risk Reversal trade opportunity for MCDERMOTT INTERNATIONAL (MDR) for the 21-Feb-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
MDR was recently trading at $1.40 and has an implied volatility of 143.66% for this period. Based on an analysis of the options available for MDR expiring on 21-Feb-2020, there is a 34.14% likelihood that the underlying will close within the analyzed range of $1.40-$3.53 at expiration. In this scenario, the average linear return for the trade would be 251.13%.
Big 12.50% Change: After closing the last trading session at $1.24, MCDERMOTT INTERNATIONAL opened today at $1.30 and has reached a high of $1.45.
Trade approach: A movement as big as 12.50% is a significantly bullish indicator, so this trade is designed to be profitable if MDR maintains its current direction and does not revert back to pricing on the bearish side of $1.40 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 bullish strategy, the trade would be profitable if MCDERMOTT INTERNATIONAL closes at or above $1.15 on 21-Feb-2020. Based on our risk-neutral analysis, there is a 58.39% 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.