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Quantchabot has detected a promising Bear Call Spread trade opportunity for WATSCO (WSO) for the 17-Apr-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
WSO was recently trading at $135.97 and has an implied volatility of 81.45% for this period. Based on an analysis of the options available for WSO expiring on 17-Apr-2020, there is a 34.14% likelihood that the underlying will close within the analyzed range of $112.27-$136.05 at expiration. In this scenario, the average linear return for the trade would be 21.25%.
52 week low: WATSCO recently reached a new 52-week low at $132.97. WSO had traded in the range $135.27-$186.87 over the past year.
Trade approach: Reaching a new 52-week low is a bearish indicator, so this trade is designed to be profitable if WSO maintains its current direction and does not revert back to pricing on the bullish side of $135.97 on 17-Apr-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 WATSCO closes at or below $141.15 on 17-Apr-2020. Based on our risk-neutral analysis, there is a 57.59% 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.