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Quantchabot has detected a promising Long Risk Reversal trade opportunity for OVERSTOCK.COM (OSTK) for the 15-Jan-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
OSTK was recently trading at $63.30 and has an implied volatility of 97.76% for this period. Based on an analysis of the options available for OSTK expiring on 15-Jan-2021, there is a 34.13% likelihood that the underlying will close within the analyzed range of $63.31-$92.93 at expiration. In this scenario, the average linear return for the trade would be 116.58%.
Big 8.61% Change: After closing the last trading session at $58.28, OVERSTOCK.COM opened today at $58.94 and has reached a high of $63.64.
Trade approach: A movement as big as 8.61% is a significantly bullish indicator, so this trade is designed to be profitable if OSTK maintains its current direction and does not revert back to pricing on the bearish side of $63.30 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 OVERSTOCK.COM closes at or above $60.30 on 15-Jan-2021. Based on our risk-neutral analysis, there is a 55.06% 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.