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Quantchabot has detected a promising Long Risk Reversal trade opportunity for 360 DIGITECH INC (QFIN) for the 21-May-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
QFIN was recently trading at $26.69 and has an implied volatility of 85.56% for this period. Based on an analysis of the options available for QFIN expiring on 21-May-2021, there is a 34.13% likelihood that the underlying will close within the analyzed range of $26.69-$35.84 at expiration. In this scenario, the average linear return for the trade would be 80.26%.
Big 7.53% Change: After closing the last trading session at $24.82, 360 DIGITECH INC opened today at $25.20 and has reached a high of $26.74.
Trade approach: A movement as big as 7.53% is a significantly bullish indicator, so this trade is designed to be profitable if QFIN maintains its current direction and does not revert back to pricing on the bearish side of $26.69 on 21-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 bullish strategy, the trade would be profitable if 360 DIGITECH INC closes at or above $26.15 on 21-May-2021. Based on our risk-neutral analysis, there is a 52.78% 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.