Quantchabot has detected a promising Bear Call Spread trade opportunity for STONECO LTD. CLASS A COMMON SHARES (STNE) for the 20-Jan-2023 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
STNE was recently trading at $10.27 and has an implied volatility of 69.92% for this period. Based on an analysis of the options available for STNE expiring on 20-Jan-2023, there is a 34.18% likelihood that the underlying will close within the analyzed range of $7.81-$10.34 at expiration. In this scenario, the average linear return for the trade would be 13.86%.
Big -8.63% Change: After closing the last trading session at $11.24, STONECO LTD. CLASS A COMMON SHARES opened today at $11.09 and has reached a low of $10.23.
Trade approach: A movement as big as -8.63% is a significantly bearish indicator, so this trade is designed to be profitable if STNE maintains its current direction and does not revert back to pricing on the bullish side of $10.27 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 STONECO LTD. CLASS A COMMON SHARES closes at or below $10.45 on 20-Jan-2023. Based on our risk-neutral analysis, there is a 51.54% 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.