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Quantchabot has detected a promising Covered Put trade opportunity for HUTCHISON CHINA MEDITECH LIMITED AMERICAN DEPOSITA (HCM) for the 20-May-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
HCM was recently trading at $12.78 and has an implied volatility of 157.90% for this period. Based on an analysis of the options available for HCM expiring on 20-May-2022, there is a 34.24% likelihood that the underlying will close within the analyzed range of $8.94-$12.78 at expiration. In this scenario, the average linear return for the trade would be 10.97%.
Big -15.31% Change: After closing the last trading session at $15.09, HUTCHISON CHINA MEDITECH LIMITED AMERICAN DEPOSITA opened today at $11.44 and has reached a low of $11.42.
Trade approach: A movement as big as -15.31% is a significantly bearish indicator, so this trade is designed to be profitable if HCM maintains its current direction and does not revert back to pricing on the bullish side of $12.78 on 20-May-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 HUTCHISON CHINA MEDITECH LIMITED AMERICAN DEPOSITA closes at or below $13.17 on 20-May-2022. Based on our risk-neutral analysis, there is a 53.34% 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.