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Quantchabot has detected a promising Long Risk Reversal trade opportunity for IQIYI INC. AMERICAN DEPOSITARY SHARES (IQ) for the 18-Feb-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

IQ was recently trading at $4.61 and has an implied volatility of 104.80% for this period. Based on an analysis of the options available for IQ expiring on 18-Feb-2022, there is a 34.14% likelihood that the underlying will close within the analyzed range of $4.61-$6.58 at expiration. In this scenario, the average linear return for the trade would be 56.37%.

Big 8.61% Change: After closing the last trading session at $4.24, IQIYI INC. AMERICAN DEPOSITARY SHARES opened today at $4.31 and has reached a high of $4.68.

Trade approach: A movement as big as 8.61% is a significantly bullish indicator, so this trade is designed to be profitable if IQ maintains its current direction and does not revert back to pricing on the bearish side of $4.61 on 18-Feb-2022. If possible, the trade has been padded such that slight movement against the trade would still return a profit.

Upside potential: Using this bullish strategy, the trade would be profitable if IQIYI INC. AMERICAN DEPOSITARY SHARES closes at or above $4.34 on 18-Feb-2022. Based on our risk-neutral analysis, there is a 56.60% 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.