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Quantchabot has detected a promising Long Risk Reversal trade opportunity for COTY INC (COTY) for the 21-Aug-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
COTY was recently trading at $3.60 and has an implied volatility of 101.95% for this period. Based on an analysis of the options available for COTY expiring on 21-Aug-2020, there is a 34.13% likelihood that the underlying will close within the analyzed range of $3.61-$6.01 at expiration. In this scenario, the average linear return for the trade would be 102.43%.
Big 8.26% Change: After closing the last trading session at $3.33, COTY INC opened today at $3.49 and has reached a high of $3.64.
Trade approach: A movement as big as 8.26% is a significantly bullish indicator, so this trade is designed to be profitable if COTY maintains its current direction and does not revert back to pricing on the bearish side of $3.60 on 21-Aug-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 COTY INC closes at or above $3.56 on 21-Aug-2020. Based on our risk-neutral analysis, there is a 51.05% 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.