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Quantchabot has detected a promising Covered Put trade opportunity for LEMONADE INC (LMND) for the 19-Feb-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
LMND was recently trading at $159.62 and has an implied volatility of 113.91% for this period. Based on an analysis of the options available for LMND expiring on 19-Feb-2021, there is a 34.13% likelihood that the underlying will close within the analyzed range of $111.49-$159.64 at expiration. In this scenario, the average linear return for the trade would be 310.00%.
Big -9.64% Change: After closing the last trading session at $176.64, LEMONADE INC opened today at $171.50 and has reached a low of $157.46.
Trade approach: A movement as big as -9.64% is a significantly bearish indicator, so this trade is designed to be profitable if LMND maintains its current direction and does not revert back to pricing on the bullish side of $159.62 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 bearish strategy, the trade would be profitable if LEMONADE INC closes at or below $237.13 on 19-Feb-2021. Based on our risk-neutral analysis, there is a 86.48% 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.