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Quantchabot has detected a promising Short Risk Reversal trade opportunity for VIRGIN GALACTIC HOLDINGS INC (SPCE) for the 25-Feb-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
SPCE was recently trading at $10.55 and has an implied volatility of 91.39% for this period. Based on an analysis of the options available for SPCE expiring on 25-Feb-2022, there is a 34.14% likelihood that the underlying will close within the analyzed range of $7.70-$10.55 at expiration. In this scenario, the average linear return for the trade would be 54.78%.
Big -14.71% Change: After closing the last trading session at $12.37, VIRGIN GALACTIC HOLDINGS INC opened today at $10.92 and has reached a low of $10.40.
Trade approach: A movement as big as -14.71% is a significantly bearish indicator, so this trade is designed to be profitable if SPCE maintains its current direction and does not revert back to pricing on the bullish side of $10.55 on 25-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 VIRGIN GALACTIC HOLDINGS INC closes at or below $10.62 on 25-Feb-2022. Based on our risk-neutral analysis, there is a 50.83% 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.