Quantchabot has detected a promising Short Risk Reversal trade opportunity for REX AMERICAN RESOURCES (REX) for the 16-Feb-2024 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
REX was recently trading at $39.94 and has an implied volatility of 42.04% for this period. Based on an analysis of the options available for REX expiring on 16-Feb-2024, there is a 30.38% likelihood that the underlying will close within the analyzed range of $30.73-$39.94 at expiration. In this scenario, the average linear return for the trade would be 64.56%.
Trending on StockTwits: StockTwits® is a financial communications platform for the financial and investing community. On their site, REX AMERICAN RESOURCES was recently trending, indicating that breaking news and/or market activity has significantly impacted sentiment toward the stock. This movement can be interpretted as a sign of more near-term price movement for the underlying.
Trade approach: The recent sentiment change in REX on StockTwits appears to be significantly negative, indicating that the stock is likely to follow in that direction for investors trading on sentiment. As a result, a bearish strategy could prove effective if the sentiment ultimately turns out to drive trading.
Upside potential: Using this bearish strategy, the trade would be profitable if REX AMERICAN RESOURCES closed at or below $42.05 on 16-Feb-2024. Based on our analysis, there is a 53.33% 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.