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Quantchabot has detected a promising Short Risk Reversal trade opportunity for 360 DIGITECH INC (QFIN) for the 19-Nov-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
QFIN was recently trading at $20.50 and has an implied volatility of 86.85% for this period. Based on an analysis of the options available for QFIN expiring on 19-Nov-2021, there is a 34.14% likelihood that the underlying will close within the analyzed range of $15.58-$20.50 at expiration. In this scenario, the average linear return for the trade would be 52.46%.
Big -7.22% Change: After closing the last trading session at $22.09, 360 DIGITECH INC opened today at $21.34 and has reached a low of $20.37.
Trade approach: A movement as big as -7.22% is a significantly bearish indicator, so this trade is designed to be profitable if QFIN maintains its current direction and does not revert back to pricing on the bullish side of $20.50 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 bearish strategy, the trade would be profitable if 360 DIGITECH INC closes at or below $20.85 on 19-Nov-2021. Based on our risk-neutral analysis, there is a 52.48% 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.