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Quantchabot has detected a promising Covered Put trade opportunity for HERBALIFE (HLF) for the 29-Oct-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
HLF was recently trading at $42.10 and has an implied volatility of 36.63% for this period. Based on an analysis of the options available for HLF expiring on 29-Oct-2021, there is a 34.14% likelihood that the underlying will close within the analyzed range of $37.06-$42.10 at expiration. In this scenario, the average linear return for the trade would be 12.82%.
52 week low: HERBALIFE recently reached a new 52-week low at $41.31. HLF had traded in the range $43.23-$59.00 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 HLF maintains its current direction and does not revert back to pricing on the bullish side of $42.10 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 HERBALIFE closes at or below $43.05 on 29-Oct-2021. Based on our risk-neutral analysis, there is a 56.90% 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.