Quantchabot has detected a promising Bear Call Spread trade opportunity for SM ENERGY (SM) for the 15-Jul-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
SM was recently trading at $36.90 and has an implied volatility of 76.84% for this period. Based on an analysis of the options available for SM expiring on 15-Jul-2022, there is a 34.22% likelihood that the underlying will close within the analyzed range of $30.36-$36.93 at expiration. In this scenario, the average linear return for the trade would be 26.29%.
Big -8.75% Change: After closing the last trading session at $40.44, SM ENERGY opened today at $37.11 and has reached a low of $36.60.
Trade approach: A movement as big as -8.75% is a significantly bearish indicator, so this trade is designed to be profitable if SM maintains its current direction and does not revert back to pricing on the bullish side of $36.90 on 15-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 SM ENERGY closes at or below $37.15 on 15-Jul-2022. Based on our risk-neutral analysis, there is a 51.24% 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.