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Quantchabot has detected a promising Long Risk Reversal trade opportunity for HOME DEPOT (HD) for the 15-May-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
HD was recently trading at $177.42 and has an implied volatility of 53.74% for this period. Based on an analysis of the options available for HD expiring on 15-May-2020, there is a 34.14% likelihood that the underlying will close within the analyzed range of $177.65-$217.26 at expiration. In this scenario, the average linear return for the trade would be 46.03%.
Big 9.25% Change: After closing the last trading session at $162.39, HOME DEPOT opened today at $173.39 and has reached a high of $180.49.
Trade approach: A movement as big as 9.25% is a significantly bullish indicator, so this trade is designed to be profitable if HD maintains its current direction and does not revert back to pricing on the bearish side of $177.42 on 15-May-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 HOME DEPOT closes at or above $176.93 on 15-May-2020. Based on our risk-neutral analysis, there is a 50.81% 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.