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Quantchabot has detected a promising Short Risk Reversal trade opportunity for SONOS INC. COMMON STOCK (SONO) for the 15-Jan-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
SONO was recently trading at $20.63 and has an implied volatility of 64.77% for this period. Based on an analysis of the options available for SONO expiring on 15-Jan-2021, there is a 34.14% likelihood that the underlying will close within the analyzed range of $16.00-$20.63 at expiration. In this scenario, the average linear return for the trade would be 64.28%.
Big -7.03% Change: After closing the last trading session at $22.19, SONOS INC. COMMON STOCK opened today at $21.62 and has reached a low of $20.01.
Trade approach: A movement as big as -7.03% is a significantly bearish indicator, so this trade is designed to be profitable if SONO maintains its current direction and does not revert back to pricing on the bullish side of $20.63 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 bearish strategy, the trade would be profitable if SONOS INC. COMMON STOCK closes at or below $21.35 on 15-Jan-2021. Based on our risk-neutral analysis, there is a 55.33% 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.