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Quantchabot has detected a promising Bear Put Spread trade opportunity for LI AUTO INC (LI) for the 7-May-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
LI was recently trading at $23.19 and has an implied volatility of 73.29% for this period. Based on an analysis of the options available for LI expiring on 7-May-2021, there is a 34.13% likelihood that the underlying will close within the analyzed range of $18.77-$23.19 at expiration. In this scenario, the average linear return for the trade would be 46.36%.
Big -9.17% Change: After closing the last trading session at $25.53, LI AUTO INC opened today at $24.26 and has reached a low of $23.15.
Trade approach: A movement as big as -9.17% is a significantly bearish indicator, so this trade is designed to be profitable if LI maintains its current direction and does not revert back to pricing on the bullish side of $23.19 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 LI AUTO INC closes at or below $23.38 on 7-May-2021. Based on our risk-neutral analysis, there is a 51.52% 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.