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Quantchabot has detected a promising Bull Put Spread trade opportunity for GAP (GPS) for the 14-May-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
GPS was recently trading at $35.57 and has an implied volatility of 45.99% for this period. Based on an analysis of the options available for GPS expiring on 14-May-2021, there is a 34.14% likelihood that the underlying will close within the analyzed range of $35.57-$38.58 at expiration. In this scenario, the average linear return for the trade would be 81.22%.
Big 7.46% Change: After closing the last trading session at $33.10, GAP opened today at $34.11 and has reached a high of $35.93.
Trade approach: A movement as big as 7.46% is a significantly bullish indicator, so this trade is designed to be profitable if GPS maintains its current direction and does not revert back to pricing on the bearish side of $35.57 on 14-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 GAP closes at or above $35.53 on 14-May-2021. Based on our risk-neutral analysis, there is a 50.57% 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.