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Quantchabot has detected a promising Long Risk Reversal trade opportunity for COGNEX (CGNX) for the 19-Jun-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
CGNX was recently trading at $55.39 and has an implied volatility of 43.68% for this period. Based on an analysis of the options available for CGNX expiring on 19-Jun-2020, there is a 34.14% likelihood that the underlying will close within the analyzed range of $55.37-$65.33 at expiration. In this scenario, the average linear return for the trade would be 34.98%.
Big 11.14% Change: After closing the last trading session at $49.84, COGNEX opened today at $53.72 and has reached a high of $57.68.
Trade approach: A movement as big as 11.14% is a significantly bullish indicator, so this trade is designed to be profitable if CGNX maintains its current direction and does not revert back to pricing on the bearish side of $55.39 on 19-Jun-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 COGNEX closes at or above $54.70 on 19-Jun-2020. Based on our risk-neutral analysis, there is a 52.93% 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.