Quantchabot has detected a promising Bear Call Spread trade opportunity for ADVANCE AUTO PARTS (AAP) for the 19-May-2023 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
AAP was recently trading at $120.13 and has an implied volatility of 34.47% for this period. Based on an analysis of the options available for AAP expiring on 19-May-2023, there is a 34.17% likelihood that the underlying will close within the analyzed range of $103.49-$119.53 at expiration. In this scenario, the average linear return for the trade would be 21.37%.
52 week low: ADVANCE AUTO PARTS recently reached a new 52-week low at $119.13. AAP had traded in the range $119.89-$231.43 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 AAP maintains its current direction and does not revert back to pricing on the bullish side of $120.13 on 19-May-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 ADVANCE AUTO PARTS closes at or below $119.65 on 19-May-2023. Based on our risk-neutral analysis, there is a 50.29% 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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