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Quantchabot has detected a promising Short Risk Reversal trade opportunity for BED BATH & BEYOND (BBBY) for the 28-Feb-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
BBBY was recently trading at $13.86 and has an implied volatility of 137.32% for this period. Based on an analysis of the options available for BBBY expiring on 28-Feb-2020, there is a 34.14% likelihood that the underlying will close within the analyzed range of $9.75-$13.89 at expiration. In this scenario, the average linear return for the trade would be 44.60%.
Big -16.76% Change: After closing the last trading session at $16.65, BED BATH & BEYOND opened today at $14.49 and has reached a low of $13.53.
Trade approach: A movement as big as -16.76% is a significantly bearish indicator, so this trade is designed to be profitable if BBBY maintains its current direction and does not revert back to pricing on the bullish side of $13.86 on 28-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 BED BATH & BEYOND closes at or below $14.13 on 28-Feb-2020. Based on our risk-neutral analysis, there is a 51.91% 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.