Quantchabot has detected a promising Bear Call Spread trade opportunity for DISCOVER FINANCIAL (DFS) for the 15-Dec-2023 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
DFS was recently trading at $84.49 and has an implied volatility of 29.99% for this period. Based on an analysis of the options available for DFS expiring on 15-Dec-2023, there is a 34.17% likelihood that the underlying will close within the analyzed range of $75.05-$84.55 at expiration. In this scenario, the average linear return for the trade would be 36.46%.
52 week low: DISCOVER FINANCIAL recently reached a new 52-week low at $83.40. DFS had traded in the range $84.43-$122.50 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 DFS maintains its current direction and does not revert back to pricing on the bullish side of $84.49 on 15-Dec-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 DISCOVER FINANCIAL closes at or below $84.75 on 15-Dec-2023. Based on our risk-neutral analysis, there is a 50.79% 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.