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Quantchabot has detected a promising Bear Call Spread trade opportunity for ELANCO ANIMAL HEALTH INC (ELAN) for the 18-Feb-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
ELAN was recently trading at $26.80 and has an implied volatility of 34.80% for this period. Based on an analysis of the options available for ELAN expiring on 18-Feb-2022, there is a 34.14% likelihood that the underlying will close within the analyzed range of $24.05-$26.80 at expiration. In this scenario, the average linear return for the trade would be 56.33%.
52 week low: ELANCO ANIMAL HEALTH INC recently reached a new 52-week low at $26.68. ELAN had traded in the range $26.86-$37.49 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 ELAN maintains its current direction and does not revert back to pricing on the bullish side of $26.80 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 ELANCO ANIMAL HEALTH INC closes at or below $26.80 on 18-Feb-2022. Based on our risk-neutral analysis, there is a 50.05% 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.