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Quantchabot has detected a promising Long Risk Reversal trade opportunity for L BRANDS INC (LB) for the 19-Feb-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
LB was recently trading at $39.24 and has an implied volatility of 58.95% for this period. Based on an analysis of the options available for LB expiring on 19-Feb-2021, there is a 34.13% likelihood that the underlying will close within the analyzed range of $39.26-$52.81 at expiration. In this scenario, the average linear return for the trade would be 49.35%.
Big 16.75% Change: After closing the last trading session at $33.61, L BRANDS INC opened today at $39.34 and has reached a high of $39.95.
Trade approach: A movement as big as 16.75% is a significantly bullish indicator, so this trade is designed to be profitable if LB maintains its current direction and does not revert back to pricing on the bearish side of $39.24 on 19-Feb-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 L BRANDS INC closes at or above $38.96 on 19-Feb-2021. Based on our risk-neutral analysis, there is a 51.04% 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.