Quantchabot has detected a promising Bear Call Spread trade opportunity for MERCADOLIBRE (MELI) for the 29-Jul-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
MELI was recently trading at $629.91 and has an implied volatility of 88.18% for this period. Based on an analysis of the options available for MELI expiring on 29-Jul-2022, there is a 34.18% likelihood that the underlying will close within the analyzed range of $460.27-$630.80 at expiration. In this scenario, the average linear return for the trade would be 39.30%.
Big -8.93% Change: After closing the last trading session at $691.69, MERCADOLIBRE opened today at $643.96 and has reached a low of $615.23.
Trade approach: A movement as big as -8.93% is a significantly bearish indicator, so this trade is designed to be profitable if MELI maintains its current direction and does not revert back to pricing on the bullish side of $629.91 on 29-Jul-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 MERCADOLIBRE closes at or below $631.10 on 29-Jul-2022. Based on our risk-neutral analysis, there is a 50.06% 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.