Big Loser Alert: Trading today’s -7.8% move in ALCOA $AA

Quantchabot has detected a promising Bear Call Spread trade opportunity for ALCOA (AA) for the 7-Oct-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

AA was recently trading at $40.13 and has an implied volatility of 67.80% for this period. Based on an analysis of the options available for AA expiring on 7-Oct-2022, there is a 34.26% likelihood that the underlying will close within the analyzed range of $34.75-$40.18 at expiration. In this scenario, the average linear return for the trade would be 33.04%.

Big -7.81% Change: After closing the last trading session at $43.53, ALCOA opened today at $43.50 and has reached a low of $40.08.

Trade approach: A movement as big as -7.81% is a significantly bearish indicator, so this trade is designed to be profitable if AA maintains its current direction and does not revert back to pricing on the bullish side of $40.13 on 7-Oct-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 ALCOA closes at or below $40.18 on 7-Oct-2022. Based on our risk-neutral analysis, there is a 50.01% 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.