Price Target Alert: Trading the Zacks price target change for CANADIAN NATIONAL RAILWAY
The automated Quantcha Trade Ideas Service has detected a promising
CNI was recently trading at $71.48 and has an implied volatility of 17.29% for this period. Based on an analysis of the options available for CNI expiring on 21-Jul-2017, there is a 56.07% likelihood that the underlying will close within the analyzed range of $61.83-$75.57 at expiration. In this scenario, the average linear return for the trade would be 33.02%.
Price target: Zacks Research has updated their six-month price target for CNI to $68.70. This price target is a consensus price created from the price targets published by 13 participating analysts whose targets ranged from $50.00 to $75.00.
Mean recommendation: Zacks normalizes analyst recommendations to a 1-5 scale where 1 indicates a strong buy. Their mean recommendation for CNI has been updated to 2.75, which indicates a hold consensus from analysts. Sentiment has moved from 2.88 to 2.88 to 2.76 over the past three months.
Trade approach: The difference between the current price for CNI and the mean price target is $1.48, which represents a 3.89% move (8.04% annualized). Since the 180-day implied volatility for CNI is 18.64%, a neutral range-bound strategy could prove effective if the price target ultimately turns out to be accurate.
Upside potential: Using this neutral range-bound strategy, the trade would be profitable if CANADIAN NATIONAL RAILWAY closed in the range $58.75-$76.25 on 21-Jul-2017. Based on our analysis, there is a 65.13% likelihood of this return. The maximum return for this trade would be 33.33% if CANADIAN NATIONAL RAILWAY closed in the range $60.00-$75.00.
Downside risk: As with any options trade, there is a substantial downside risk where you may lose most or all of your investment.
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This is an automated post generated based on a market analysis of delayed data at 2/17/2017 1:22:27 PM ET. The analysis does not include brokerage fees or commissions and is not investment advice.