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Quantchabot has detected a promising Bear Put Spread trade opportunity for ALIBABA GROUP HOLDING LIMITED (BABA) for the 21-Jan-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
BABA was recently trading at $137.53 and has an implied volatility of 47.33% for this period. Based on an analysis of the options available for BABA expiring on 21-Jan-2022, there is a 34.13% likelihood that the underlying will close within the analyzed range of $113.48-$137.55 at expiration. In this scenario, the average linear return for the trade would be 78.96%.
52 week low: ALIBABA GROUP HOLDING LIMITED recently reached a new 52-week low at $136.91. BABA had traded in the range $138.43-$280.61 over the past year.
Trade approach: Reaching a new 52-week low is a bearish indicator, so this trade is designed to be profitable if BABA maintains its current direction and does not revert back to pricing on the bullish side of $137.53 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 bearish strategy, the trade would be profitable if ALIBABA GROUP HOLDING LIMITED closes at or below $139.50 on 21-Jan-2022. Based on our risk-neutral analysis, there is a 52.91% 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.