Quantchabot has detected a promising Short Risk Reversal trade opportunity for INGERSOLL RAND (IR) for the 15-Jul-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
IR was recently trading at $40.98 and has an implied volatility of 37.68% for this period. Based on an analysis of the options available for IR expiring on 15-Jul-2022, there is a 34.23% likelihood that the underlying will close within the analyzed range of $37.33-$41.01 at expiration. In this scenario, the average linear return for the trade would be 12.12%.
52 week low: INGERSOLL RAND recently reached a new 52-week low at $40.89. IR had traded in the range $41.16-$62.64 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 IR maintains its current direction and does not revert back to pricing on the bullish side of $40.98 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 INGERSOLL RAND closes at or below $41.20 on 15-Jul-2022. Based on our risk-neutral analysis, there is a 52.02% 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.