Quantchabot has detected a promising Bear Call Spread trade opportunity for HORMEL FOODS (HRL) for the 28-Apr-2023 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
HRL was recently trading at $39.06 and has an implied volatility of 20.29% for this period. Based on an analysis of the options available for HRL expiring on 28-Apr-2023, there is a 34.18% likelihood that the underlying will close within the analyzed range of $36.58-$39.30 at expiration. In this scenario, the average linear return for the trade would be 40.46%.
52 week low: HORMEL FOODS recently reached a new 52-week low at $39.02. HRL had traded in the range $39.03-$55.11 over the past year.
Trade approach: Reaching a new 52-week low is a bearish indicator, so this trade is designed to be profitable if HRL maintains its current direction and does not revert back to pricing on the bullish side of $39.06 on 28-Apr-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 HORMEL FOODS closes at or below $39.40 on 28-Apr-2023. Based on our risk-neutral analysis, there is a 51.47% 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.
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