52-Week Low Alert: Trading today’s movement in MERCADOLIBRE $MELI

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Quantchabot has detected a promising Bear Put Spread trade opportunity for MERCADOLIBRE (MELI) for the 18-Feb-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

MELI was recently trading at $1,016.53 and has an implied volatility of 57.45% for this period. Based on an analysis of the options available for MELI expiring on 18-Feb-2022, there is a 34.13% likelihood that the underlying will close within the analyzed range of $842.01-$1,016.58 at expiration. In this scenario, the average linear return for the trade would be 78.59%.

52 week low: MERCADOLIBRE recently reached a new 52-week low at $1,001.01. MELI had traded in the range $1,018.73-$2,020.00 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 MELI maintains its current direction and does not revert back to pricing on the bullish side of $1,016.53 on 18-Feb-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 MERCADOLIBRE closes at or below $1,017.60 on 18-Feb-2022. Based on our risk-neutral analysis, there is a 50.21% 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.