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Quantchabot has detected a promising Short Risk Reversal trade opportunity for EHANG HOLDINGS LTD. ADR OVERVIEW (EH) for the 21-May-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
EH was recently trading at $25.35 and has an implied volatility of 143.85% for this period. Based on an analysis of the options available for EH expiring on 21-May-2021, there is a 34.14% likelihood that the underlying will close within the analyzed range of $18.35-$25.35 at expiration. In this scenario, the average linear return for the trade would be 62.91%.
Big -9.14% Change: After closing the last trading session at $27.90, EHANG HOLDINGS LTD. ADR OVERVIEW opened today at $27.01 and has reached a low of $25.20.
Trade approach: A movement as big as -9.14% is a significantly bearish indicator, so this trade is designed to be profitable if EH maintains its current direction and does not revert back to pricing on the bullish side of $25.35 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 bearish strategy, the trade would be profitable if EHANG HOLDINGS LTD. ADR OVERVIEW closes at or below $25.50 on 21-May-2021. Based on our risk-neutral analysis, there is a 50.72% 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.