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Quantchabot has detected a promising Bull Put Spread trade opportunity for AMERICAN ELECTRIC POWER (AEP) for the 18-Feb-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
AEP was recently trading at $91.19 and has an implied volatility of 17.15% for this period. Based on an analysis of the options available for AEP expiring on 18-Feb-2022, there is a 34.13% likelihood that the underlying will close within the analyzed range of $91.19-$96.26 at expiration. In this scenario, the average linear return for the trade would be 57.13%.
52 week high: AMERICAN ELECTRIC POWER recently reached a new 52-week high at $91.58. AEP had traded in the range $74.80-$91.49 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 AEP maintains its current direction and does not revert back to pricing on the bearish side of $91.19 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 bullish strategy, the trade would be profitable if AMERICAN ELECTRIC POWER closes at or above $90.55 on 18-Feb-2022. Based on our risk-neutral analysis, there is a 55.21% 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.