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Quantchabot has detected a promising Short Risk Reversal trade opportunity for RIOT BLOCKCHAIN INC. COMMON STOCK (RIOT) for the 7-May-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
RIOT was recently trading at $50.07 and has an implied volatility of 124.46% for this period. Based on an analysis of the options available for RIOT expiring on 7-May-2021, there is a 34.14% likelihood that the underlying will close within the analyzed range of $34.97-$50.07 at expiration. In this scenario, the average linear return for the trade would be 89.38%.
Big -7.45% Change: After closing the last trading session at $54.10, RIOT BLOCKCHAIN INC. COMMON STOCK opened today at $50.52 and has reached a low of $49.80.
Trade approach: A movement as big as -7.45% is a significantly bearish indicator, so this trade is designed to be profitable if RIOT maintains its current direction and does not revert back to pricing on the bullish side of $50.07 on 7-May-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 RIOT BLOCKCHAIN INC. COMMON STOCK closes at or below $60.27 on 7-May-2021. Based on our risk-neutral analysis, there is a 69.72% 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.