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Quantchabot has detected a promising Long Risk Reversal trade opportunity for KINIKSA PHARMACEUTICALS LTD. CLASS A COMMON STOCK (KNSA) for the 16-Oct-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
KNSA was recently trading at $17.68 and has an implied volatility of 78.21% for this period. Based on an analysis of the options available for KNSA expiring on 16-Oct-2020, there is a 34.14% likelihood that the underlying will close within the analyzed range of $17.68-$22.23 at expiration. In this scenario, the average linear return for the trade would be 22.01%.
Big 7.28% Change: After closing the last trading session at $16.48, KINIKSA PHARMACEUTICALS LTD. CLASS A COMMON STOCK opened today at $16.79 and has reached a high of $17.88.
Trade approach: A movement as big as 7.28% is a significantly bullish indicator, so this trade is designed to be profitable if KNSA maintains its current direction and does not revert back to pricing on the bearish side of $17.68 on 16-Oct-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 KINIKSA PHARMACEUTICALS LTD. CLASS A COMMON STOCK closes at or above $17.00 on 16-Oct-2020. Based on our risk-neutral analysis, there is a 56.83% 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.