Big Loser Alert: Trading today’s -7.6% move in DIAMONDBACK ENERGY INC $FANG

Quantchabot has detected a promising Bear Call Spread trade opportunity for DIAMONDBACK ENERGY INC (FANG) for the 20-Jan-2023 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

FANG was recently trading at $144.30 and has an implied volatility of 46.14% for this period. Based on an analysis of the options available for FANG expiring on 20-Jan-2023, there is a 34.18% likelihood that the underlying will close within the analyzed range of $120.34-$145.27 at expiration. In this scenario, the average linear return for the trade would be 16.12%.

Big -7.63% Change: After closing the last trading session at $156.22, DIAMONDBACK ENERGY INC opened today at $151.91 and has reached a low of $143.69.

Trade approach: A movement as big as -7.63% is a significantly bearish indicator, so this trade is designed to be profitable if FANG maintains its current direction and does not revert back to pricing on the bullish side of $144.30 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 DIAMONDBACK ENERGY INC closes at or below $145.29 on 20-Jan-2023. Based on our risk-neutral analysis, there is a 50.04% 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.