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Quantchabot has detected a promising Bear Put Spread trade opportunity for CARVANA CO (CVNA) for the 1-May-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
CVNA was recently trading at $82.65 and has an implied volatility of 108.91% for this period. Based on an analysis of the options available for CVNA expiring on 1-May-2020, there is a 34.14% likelihood that the underlying will close within the analyzed range of $74.52-$82.65 at expiration. In this scenario, the average linear return for the trade would be 60.73%.
Big -8.48% Change: After closing the last trading session at $90.31, CARVANA CO opened today at $94.26 and has reached a low of $82.55.
Trade approach: A movement as big as -8.48% is a significantly bearish indicator, so this trade is designed to be profitable if CVNA maintains its current direction and does not revert back to pricing on the bullish side of $82.65 on 1-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 bearish strategy, the trade would be profitable if CARVANA CO closes at or below $82.70 on 1-May-2020. Based on our risk-neutral analysis, there is a 50.22% 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.