Quantchabot has detected a promising Bear Call Spread trade opportunity for MADRIGAL PHARMACEUTICALS INC (MDGL) for the 20-Oct-2023 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
MDGL was recently trading at $178.50 and has an implied volatility of 71.04% for this period. Based on an analysis of the options available for MDGL expiring on 20-Oct-2023, there is a 34.19% likelihood that the underlying will close within the analyzed range of $142.08-$179.61 at expiration. In this scenario, the average linear return for the trade would be 17.64%.
Big -9.20% Change: After closing the last trading session at $196.58, MADRIGAL PHARMACEUTICALS INC opened today at $185.20 and has reached a low of $177.00.
Trade approach: A movement as big as -9.20% is a significantly bearish indicator, so this trade is designed to be profitable if MDGL maintains its current direction and does not revert back to pricing on the bullish side of $178.50 on 20-Oct-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 MADRIGAL PHARMACEUTICALS INC closes at or below $181.10 on 20-Oct-2023. Based on our risk-neutral analysis, there is a 51.42% 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.