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Quantchabot has detected a promising Long Risk Reversal trade opportunity for ROOT INC. CLASS A COMMON STOCK (ROOT) for the 19-Nov-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
ROOT was recently trading at $5.50 and has an implied volatility of 118.69% for this period. Based on an analysis of the options available for ROOT expiring on 19-Nov-2021, there is a 34.14% likelihood that the underlying will close within the analyzed range of $5.51-$8.01 at expiration. In this scenario, the average linear return for the trade would be 107.38%.
Big 8.37% Change: After closing the last trading session at $5.08, ROOT INC. CLASS A COMMON STOCK opened today at $5.11 and has reached a high of $5.51.
Trade approach: A movement as big as 8.37% is a significantly bullish indicator, so this trade is designed to be profitable if ROOT maintains its current direction and does not revert back to pricing on the bearish side of $5.50 on 19-Nov-2021. If possible, the trade has been padded such that slight movement against the trade would still return a profit.
Upside potential: Using this bullish strategy, the trade would be profitable if ROOT INC. CLASS A COMMON STOCK closes at or above $5.25 on 19-Nov-2021. Based on our risk-neutral analysis, there is a 55.05% 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.