Quantcha now offering unlimited commission-free options trading.
Quantchabot has detected a promising Bear Put Spread trade opportunity for STONECO LTD. CLASS A COMMON SHARES (STNE) for the 29-Oct-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
STNE was recently trading at $43.96 and has an implied volatility of 47.14% for this period. Based on an analysis of the options available for STNE expiring on 29-Oct-2021, there is a 34.14% likelihood that the underlying will close within the analyzed range of $37.17-$43.96 at expiration. In this scenario, the average linear return for the trade would be 59.38%.
52 week low: STONECO LTD. CLASS A COMMON SHARES recently reached a new 52-week low at $42.17. STNE had traded in the range $42.45-$95.12 over the past year.
Trade approach: Reaching a new 52-week low is a bearish indicator, so this trade is designed to be profitable if STNE maintains its current direction and does not revert back to pricing on the bullish side of $43.96 on 29-Oct-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 STONECO LTD. CLASS A COMMON SHARES closes at or below $44.05 on 29-Oct-2021. Based on our risk-neutral analysis, there is a 50.46% 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.