Quantcha now offering unlimited commission-free options trading.
Quantchabot has detected a promising Long Risk Reversal trade opportunity for SMILEDIRECTCLUB INC. (SDC) for the 15-Jan-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
SDC was recently trading at $11.31 and has an implied volatility of 80.82% for this period. Based on an analysis of the options available for SDC expiring on 15-Jan-2021, there is a 34.13% likelihood that the underlying will close within the analyzed range of $11.32-$15.63 at expiration. In this scenario, the average linear return for the trade would be 85.41%.
Big 10.38% Change: After closing the last trading session at $10.25, SMILEDIRECTCLUB INC. opened today at $10.31 and has reached a high of $11.40.
Trade approach: A movement as big as 10.38% is a significantly bullish indicator, so this trade is designed to be profitable if SDC maintains its current direction and does not revert back to pricing on the bearish side of $11.31 on 15-Jan-2021. 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 SMILEDIRECTCLUB INC. closes at or above $11.07 on 15-Jan-2021. Based on our risk-neutral analysis, there is a 52.72% 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.