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Quantchabot has detected a promising Short Risk Reversal trade opportunity for DIGITAL OCEAN HOLDINGS INC (DOCN) for the 18-Feb-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
DOCN was recently trading at $59.75 and has an implied volatility of 78.87% for this period. Based on an analysis of the options available for DOCN expiring on 18-Feb-2022, there is a 34.13% likelihood that the underlying will close within the analyzed range of $46.76-$59.75 at expiration. In this scenario, the average linear return for the trade would be 61.63%.
Big -8.67% Change: After closing the last trading session at $65.42, DIGITAL OCEAN HOLDINGS INC opened today at $60.30 and has reached a low of $58.41.
Trade approach: A movement as big as -8.67% is a significantly bearish indicator, so this trade is designed to be profitable if DOCN maintains its current direction and does not revert back to pricing on the bullish side of $59.75 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 DIGITAL OCEAN HOLDINGS INC closes at or below $61.45 on 18-Feb-2022. Based on our risk-neutral analysis, there is a 54.55% 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.