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Quantchabot has detected a promising Bull Call Spread trade opportunity for ALIBABA GROUP HOLDING LIMITED (BABA) for the 24-Jan-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
BABA was recently trading at $218.78 and has an implied volatility of 24.24% for this period. Based on an analysis of the options available for BABA expiring on 24-Jan-2020, there is a 34.14% likelihood that the underlying will close within the analyzed range of $219.02-$232.61 at expiration. In this scenario, the average linear return for the trade would be 67.88%.
52 week high: ALIBABA GROUP HOLDING LIMITED recently reached a new 52-week high at $219.15. BABA had traded in the range $129.83-$218.11 over the past year.
Trade approach: Reaching a new 52-week high is a bullish indicator, so this trade is designed to be profitable if BABA maintains its current direction and does not revert back to pricing on the bearish side of $218.78 on 24-Jan-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 ALIBABA GROUP HOLDING LIMITED closes at or above $217.95 on 24-Jan-2020. Based on our risk-neutral analysis, there is a 53.25% 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.