Big Gainer Alert: Trading today’s 8.3% move in SM ENERGY $SM

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Quantchabot has detected a promising Bull Call Spread trade opportunity for SM ENERGY (SM) for the 17-Jan-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

SM was recently trading at $12.12 and has an implied volatility of 62.30% for this period. Based on an analysis of the options available for SM expiring on 17-Jan-2020, there is a 34.14% likelihood that the underlying will close within the analyzed range of $12.12-$13.72 at expiration. In this scenario, the average linear return for the trade would be 25.34%.

Big 8.28% Change: After closing the last trading session at $11.19, SM ENERGY opened today at $11.69 and has reached a high of $12.24.

Trade approach: A movement as big as 8.28% is a significantly bullish indicator, so this trade is designed to be profitable if SM maintains its current direction and does not revert back to pricing on the bearish side of $12.12 on 17-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 SM ENERGY closes at or above $11.95 on 17-Jan-2020. Based on our risk-neutral analysis, there is a 54.67% 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.