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Quantchabot has detected a promising Bear Call Spread trade opportunity for DAQO NEW ENERGY (DQ) for the 16-Apr-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
DQ was recently trading at $69.63 and has an implied volatility of 92.23% for this period. Based on an analysis of the options available for DQ expiring on 16-Apr-2021, there is a 34.14% likelihood that the underlying will close within the analyzed range of $59.19-$69.63 at expiration. In this scenario, the average linear return for the trade would be 57.19%.
Big -7.39% Change: After closing the last trading session at $75.19, DAQO NEW ENERGY opened today at $77.00 and has reached a low of $69.27.
Trade approach: A movement as big as -7.39% is a significantly bearish indicator, so this trade is designed to be profitable if DQ maintains its current direction and does not revert back to pricing on the bullish side of $69.63 on 16-Apr-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 DAQO NEW ENERGY closes at or below $69.70 on 16-Apr-2021. Based on our risk-neutral analysis, there is a 50.24% 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.