Quantchabot has detected a promising Bear Call Spread trade opportunity for VALERO ENERGY (VLO) for the 22-Jul-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
VLO was recently trading at $105.05 and has an implied volatility of 55.45% for this period. Based on an analysis of the options available for VLO expiring on 22-Jul-2022, there is a 34.20% likelihood that the underlying will close within the analyzed range of $89.77-$105.13 at expiration. In this scenario, the average linear return for the trade would be 31.15%.
Big -7.14% Change: After closing the last trading session at $113.13, VALERO ENERGY opened today at $114.94 and has reached a low of $104.87.
Trade approach: A movement as big as -7.14% is a significantly bearish indicator, so this trade is designed to be profitable if VLO maintains its current direction and does not revert back to pricing on the bullish side of $105.05 on 22-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 VALERO ENERGY closes at or below $105.21 on 22-Jul-2022. Based on our risk-neutral analysis, there is a 50.18% 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.