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Quantchabot has detected a promising Bull Call Spread trade opportunity for AUTOMATIC DATA PROCESSING (ADP) for the 21-Jan-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
ADP was recently trading at $230.29 and has an implied volatility of 20.16% for this period. Based on an analysis of the options available for ADP expiring on 21-Jan-2022, there is a 34.14% likelihood that the underlying will close within the analyzed range of $230.33-$251.96 at expiration. In this scenario, the average linear return for the trade would be 49.25%.
52 week high: AUTOMATIC DATA PROCESSING recently reached a new 52-week high at $231.70. ADP had traded in the range $159.31-$230.20 over the past year.
Trade approach: Reaching a new 52-week high is a bullish indicator, so this trade is designed to be profitable if ADP maintains its current direction and does not revert back to pricing on the bearish side of $230.29 on 21-Jan-2022. 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 AUTOMATIC DATA PROCESSING closes at or above $226.70 on 21-Jan-2022. Based on our risk-neutral analysis, there is a 57.03% 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.