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Quantchabot has detected a promising Short Risk Reversal trade opportunity for CLEVELAND-CLIFFS INC (CLF) for the 16-Jul-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
CLF was recently trading at $18.64 and has an implied volatility of 71.05% for this period. Based on an analysis of the options available for CLF expiring on 16-Jul-2021, there is a 34.14% likelihood that the underlying will close within the analyzed range of $14.03-$18.64 at expiration. In this scenario, the average linear return for the trade would be 65.66%.
Big -7.91% Change: After closing the last trading session at $20.24, CLEVELAND-CLIFFS INC opened today at $19.46 and has reached a low of $18.62.
Trade approach: A movement as big as -7.91% is a significantly bearish indicator, so this trade is designed to be profitable if CLF maintains its current direction and does not revert back to pricing on the bullish side of $18.64 on 16-Jul-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 CLEVELAND-CLIFFS INC closes at or below $19.09 on 16-Jul-2021. Based on our risk-neutral analysis, there is a 53.32% 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.