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Quantchabot has detected a promising Short Risk Reversal trade opportunity for TAL EDUCATION GROUP (TAL) for the 15-Oct-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
TAL was recently trading at $4.33 and has an implied volatility of 122.73% for this period. Based on an analysis of the options available for TAL expiring on 15-Oct-2021, there is a 34.13% likelihood that the underlying will close within the analyzed range of $3.04-$4.33 at expiration. In this scenario, the average linear return for the trade would be 57.10%.
Big -7.28% Change: After closing the last trading session at $4.67, TAL EDUCATION GROUP opened today at $4.69 and has reached a low of $4.28.
Trade approach: A movement as big as -7.28% is a significantly bearish indicator, so this trade is designed to be profitable if TAL maintains its current direction and does not revert back to pricing on the bullish side of $4.33 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 TAL EDUCATION GROUP closes at or below $4.35 on 15-Oct-2021. Based on our risk-neutral analysis, there is a 50.51% 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.