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Quantchabot has detected a promising Bear Call Spread trade opportunity for SM ENERGY (SM) for the 18-Jun-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
SM was recently trading at $16.57 and has an implied volatility of 87.70% for this period. Based on an analysis of the options available for SM expiring on 18-Jun-2021, there is a 34.14% likelihood that the underlying will close within the analyzed range of $12.87-$16.57 at expiration. In this scenario, the average linear return for the trade would be 43.28%.
Big -10.48% Change: After closing the last trading session at $18.51, SM ENERGY opened today at $17.34 and has reached a low of $16.33.
Trade approach: A movement as big as -10.48% is a significantly bearish indicator, so this trade is designed to be profitable if SM maintains its current direction and does not revert back to pricing on the bullish side of $16.57 on 18-Jun-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 SM ENERGY closes at or below $16.75 on 18-Jun-2021. Based on our risk-neutral analysis, there is a 51.69% 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.