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Quantchabot has detected a promising Long Risk Reversal trade opportunity for GSX TECHEDU INC (GSX) for the 15-May-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
GSX was recently trading at $34.25 and has an implied volatility of 126.45% for this period. Based on an analysis of the options available for GSX expiring on 15-May-2020, there is a 34.14% likelihood that the underlying will close within the analyzed range of $34.26-$45.50 at expiration. In this scenario, the average linear return for the trade would be 71.98%.
Big 7.87% Change: After closing the last trading session at $31.75, GSX TECHEDU INC opened today at $31.75 and has reached a high of $34.33.
Trade approach: A movement as big as 7.87% is a significantly bullish indicator, so this trade is designed to be profitable if GSX maintains its current direction and does not revert back to pricing on the bearish side of $34.25 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 GSX TECHEDU INC closes at or above $33.00 on 15-May-2020. Based on our risk-neutral analysis, there is a 55.25% 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.