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Quantchabot has detected a promising Covered Put trade opportunity for YOUDAO INC (DAO) for the 15-Oct-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
DAO was recently trading at $11.89 and has an implied volatility of 104.25% for this period. Based on an analysis of the options available for DAO expiring on 15-Oct-2021, there is a 34.14% likelihood that the underlying will close within the analyzed range of $8.81-$11.89 at expiration. In this scenario, the average linear return for the trade would be 103.03%.
Big -11.66% Change: After closing the last trading session at $13.46, YOUDAO INC opened today at $13.22 and has reached a low of $11.76.
Trade approach: A movement as big as -11.66% is a significantly bearish indicator, so this trade is designed to be profitable if DAO maintains its current direction and does not revert back to pricing on the bullish side of $11.89 on 15-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 YOUDAO INC closes at or below $17.67 on 15-Oct-2021. Based on our risk-neutral analysis, there is a 90.64% 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.