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Quantchabot has detected a promising Short Risk Reversal trade opportunity for PATTERSON-UTI ENERGY (PTEN) for the 17-Jul-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
PTEN was recently trading at $3.60 and has an implied volatility of 111.52% for this period. Based on an analysis of the options available for PTEN expiring on 17-Jul-2020, there is a 34.13% likelihood that the underlying will close within the analyzed range of $2.31-$3.58 at expiration. In this scenario, the average linear return for the trade would be 65.17%.
Big -7.46% Change: After closing the last trading session at $3.89, PATTERSON-UTI ENERGY opened today at $3.81 and has reached a low of $3.55.
Trade approach: A movement as big as -7.46% is a significantly bearish indicator, so this trade is designed to be profitable if PTEN maintains its current direction and does not revert back to pricing on the bullish side of $3.60 on 17-Jul-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 PATTERSON-UTI ENERGY closes at or below $3.70 on 17-Jul-2020. Based on our risk-neutral analysis, there is a 52.98% 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.