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Quantchabot has detected a promising Long Risk Reversal trade opportunity for PAPA JOHN’S INTERNATIONAL (PZZA) for the 8-May-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
PZZA was recently trading at $72.65 and has an implied volatility of 68.43% for this period. Based on an analysis of the options available for PZZA expiring on 8-May-2020, there is a 34.14% likelihood that the underlying will close within the analyzed range of $72.66-$81.98 at expiration. In this scenario, the average linear return for the trade would be 15.32%.
52 week high: PAPA JOHN’S INTERNATIONAL recently reached a new 52-week high at $73.21. PZZA had traded in the range $28.55-$72.93 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 PZZA maintains its current direction and does not revert back to pricing on the bearish side of $72.65 on 8-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 PAPA JOHN’S INTERNATIONAL closes at or above $72.30 on 8-May-2020. Based on our risk-neutral analysis, there is a 51.65% 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.