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Quantchabot has detected a promising Short Risk Reversal trade opportunity for CANOPY GROWTH CORP (CGC) for the 6-Nov-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
CGC was recently trading at $18.21 and has an implied volatility of 82.16% for this period. Based on an analysis of the options available for CGC expiring on 6-Nov-2020, there is a 34.14% likelihood that the underlying will close within the analyzed range of $14.73-$18.21 at expiration. In this scenario, the average linear return for the trade would be 51.31%.
Big -7.14% Change: After closing the last trading session at $19.61, CANOPY GROWTH CORP opened today at $19.06 and has reached a low of $18.18.
Trade approach: A movement as big as -7.14% is a significantly bearish indicator, so this trade is designed to be profitable if CGC maintains its current direction and does not revert back to pricing on the bullish side of $18.21 on 6-Nov-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 CANOPY GROWTH CORP closes at or below $18.52 on 6-Nov-2020. Based on our risk-neutral analysis, there is a 53.15% 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.