Quantchabot has detected a promising Bear Call Spread trade opportunity for MELCO RESORTS & ENTERTAINMENT LTD (MLCO) for the 20-Jan-2023 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
MLCO was recently trading at $6.89 and has an implied volatility of 85.12% for this period. Based on an analysis of the options available for MLCO expiring on 20-Jan-2023, there is a 34.18% likelihood that the underlying will close within the analyzed range of $4.90-$6.94 at expiration. In this scenario, the average linear return for the trade would be 24.91%.
Big -7.20% Change: After closing the last trading session at $7.43, MELCO RESORTS & ENTERTAINMENT LTD opened today at $7.08 and has reached a low of $6.82.
Trade approach: A movement as big as -7.20% is a significantly bearish indicator, so this trade is designed to be profitable if MLCO maintains its current direction and does not revert back to pricing on the bullish side of $6.89 on 20-Jan-2023. 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 MELCO RESORTS & ENTERTAINMENT LTD closes at or below $6.95 on 20-Jan-2023. Based on our risk-neutral analysis, there is a 50.15% 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.