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Quantchabot has detected a promising Long Risk Reversal trade opportunity for ALIGNMENT HEALTHCARE INC. COMMON STOCK (ALHC) for the 21-May-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
ALHC was recently trading at $22.51 and has an implied volatility of 149.94% for this period. Based on an analysis of the options available for ALHC expiring on 21-May-2021, there is a 34.14% likelihood that the underlying will close within the analyzed range of $22.51-$26.52 at expiration. In this scenario, the average linear return for the trade would be 14.00%.
Big 7.40% Change: After closing the last trading session at $20.96, ALIGNMENT HEALTHCARE INC. COMMON STOCK opened today at $21.30 and has reached a high of $22.73.
Trade approach: A movement as big as 7.40% is a significantly bullish indicator, so this trade is designed to be profitable if ALHC maintains its current direction and does not revert back to pricing on the bearish side of $22.51 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 ALIGNMENT HEALTHCARE INC. COMMON STOCK closes at or above $21.85 on 21-May-2021. Based on our risk-neutral analysis, there is a 57.21% 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.