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Quantchabot has detected a promising Long Risk Reversal trade opportunity for KENSIGNTON CAPITAL ACQUISITION CORP (QS) for the 29-Jan-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
QS was recently trading at $57.45 and has an implied volatility of 163.32% for this period. Based on an analysis of the options available for QS expiring on 29-Jan-2021, there is a 34.14% likelihood that the underlying will close within the analyzed range of $57.45-$82.02 at expiration. In this scenario, the average linear return for the trade would be 98.70%.
Big 8.10% Change: After closing the last trading session at $53.14, KENSIGNTON CAPITAL ACQUISITION CORP opened today at $54.00 and has reached a high of $58.50.
Trade approach: A movement as big as 8.10% is a significantly bullish indicator, so this trade is designed to be profitable if QS maintains its current direction and does not revert back to pricing on the bearish side of $57.45 on 29-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 KENSIGNTON CAPITAL ACQUISITION CORP closes at or above $55.80 on 29-Jan-2021. Based on our risk-neutral analysis, there is a 53.26% 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.