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Quantchabot has detected a promising Bear Call Spread trade opportunity for SMILEDIRECTCLUB INC. (SDC) for the 7-May-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
SDC was recently trading at $8.83 and has an implied volatility of 78.92% for this period. Based on an analysis of the options available for SDC expiring on 7-May-2021, there is a 34.14% likelihood that the underlying will close within the analyzed range of $8.19-$8.83 at expiration. In this scenario, the average linear return for the trade would be 21.95%.
Big -16.93% Change: After closing the last trading session at $10.63, SMILEDIRECTCLUB INC. opened today at $9.24 and has reached a low of $8.76.
Trade approach: A movement as big as -16.93% is a significantly bearish indicator, so this trade is designed to be profitable if SDC maintains its current direction and does not revert back to pricing on the bullish side of $8.83 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 SMILEDIRECTCLUB INC. closes at or below $9.09 on 7-May-2021. Based on our risk-neutral analysis, there is a 64.92% 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.