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Quantchabot has detected a promising Bear Put Spread trade opportunity for DAQO NEW ENERGY (DQ) for the 16-Oct-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
DQ was recently trading at $201.88 and has an implied volatility of 94.89% for this period. Based on an analysis of the options available for DQ expiring on 16-Oct-2020, there is a 34.16% likelihood that the underlying will close within the analyzed range of $190.51-$201.88 at expiration. In this scenario, the average linear return for the trade would be 46.48%.
Big -7.72% Change: After closing the last trading session at $218.76, DAQO NEW ENERGY opened today at $209.94 and has reached a low of $201.85.
Trade approach: A movement as big as -7.72% is a significantly bearish indicator, so this trade is designed to be profitable if DQ maintains its current direction and does not revert back to pricing on the bullish side of $201.88 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 bearish strategy, the trade would be profitable if DAQO NEW ENERGY closes at or below $203.30 on 16-Oct-2020. Based on our risk-neutral analysis, there is a 54.81% 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.