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Quantchabot has detected a promising Short Risk Reversal trade opportunity for ALIGNMENT HEALTHCARE INC. COMMON STOCK (ALHC) for the 21-Jan-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
ALHC was recently trading at $18.99 and has an implied volatility of 65.52% for this period. Based on an analysis of the options available for ALHC expiring on 21-Jan-2022, there is a 34.14% likelihood that the underlying will close within the analyzed range of $14.58-$18.99 at expiration. In this scenario, the average linear return for the trade would be 36.34%.
Big -8.22% Change: After closing the last trading session at $20.69, ALIGNMENT HEALTHCARE INC. COMMON STOCK opened today at $20.56 and has reached a low of $18.91.
Trade approach: A movement as big as -8.22% is a significantly bearish indicator, so this trade is designed to be profitable if ALHC maintains its current direction and does not revert back to pricing on the bullish side of $18.99 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 ALIGNMENT HEALTHCARE INC. COMMON STOCK closes at or below $19.35 on 21-Jan-2022. Based on our risk-neutral analysis, there is a 52.81% 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.