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Quantchabot has detected a promising Bear Put Spread trade opportunity for MOMO INC. AMERICAN DEPOSITARY (MOMO) for the 22-May-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
MOMO was recently trading at $19.55 and has an implied volatility of 65.56% for this period. Based on an analysis of the options available for MOMO expiring on 22-May-2020, there is a 34.20% likelihood that the underlying will close within the analyzed range of $19.14-$19.56 at expiration. In this scenario, the average linear return for the trade would be 15.02%.
Big -7.37% Change: After closing the last trading session at $21.11, MOMO INC. AMERICAN DEPOSITARY opened today at $20.57 and has reached a low of $19.53.
Trade approach: A movement as big as -7.37% is a significantly bearish indicator, so this trade is designed to be profitable if MOMO maintains its current direction and does not revert back to pricing on the bullish side of $19.55 on 22-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 MOMO INC. AMERICAN DEPOSITARY closes at or below $19.56 on 22-May-2020. Based on our risk-neutral analysis, there is a 50.48% 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.