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Quantchabot has detected a promising Long Risk Reversal trade opportunity for ALLY FINANCIAL INC (ALLY) for the 19-Jun-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
ALLY was recently trading at $16.27 and has an implied volatility of 77.22% for this period. Based on an analysis of the options available for ALLY expiring on 19-Jun-2020, there is a 34.13% likelihood that the underlying will close within the analyzed range of $16.09-$21.55 at expiration. In this scenario, the average linear return for the trade would be 64.19%.
Big 7.04% Change: After closing the last trading session at $15.20, ALLY FINANCIAL INC opened today at $15.89 and has reached a high of $16.48.
Trade approach: A movement as big as 7.04% is a significantly bullish indicator, so this trade is designed to be profitable if ALLY maintains its current direction and does not revert back to pricing on the bearish side of $16.27 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 ALLY FINANCIAL INC closes at or above $15.80 on 19-Jun-2020. Based on our risk-neutral analysis, there is a 52.48% 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.