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Quantchabot has detected a promising Short Risk Reversal trade opportunity for CHEWY INC (CHWY) for the 18-Mar-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
CHWY was recently trading at $47.75 and has an implied volatility of 54.28% for this period. Based on an analysis of the options available for CHWY expiring on 18-Mar-2022, there is a 34.14% likelihood that the underlying will close within the analyzed range of $38.02-$47.75 at expiration. In this scenario, the average linear return for the trade would be 55.34%.
52 week low: CHEWY INC recently reached a new 52-week low at $46.44. CHWY had traded in the range $46.45-$120.00 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 CHWY maintains its current direction and does not revert back to pricing on the bullish side of $47.75 on 18-Mar-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 CHEWY INC closes at or below $48.75 on 18-Mar-2022. Based on our risk-neutral analysis, there is a 53.61% 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.