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Quantchabot has detected a promising Long Risk Reversal trade opportunity for WPX ENERGY (WPX) for the 19-Feb-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

WPX was recently trading at $7.22 and has an implied volatility of 71.15% for this period. Based on an analysis of the options available for WPX expiring on 19-Feb-2021, there is a 34.13% likelihood that the underlying will close within the analyzed range of $7.22-$10.25 at expiration. In this scenario, the average linear return for the trade would be 53.78%.

Big 7.12% Change: After closing the last trading session at $6.74, WPX ENERGY opened today at $6.87 and has reached a high of $7.31.

Trade approach: A movement as big as 7.12% is a significantly bullish indicator, so this trade is designed to be profitable if WPX maintains its current direction and does not revert back to pricing on the bearish side of $7.22 on 19-Feb-2021. 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 WPX ENERGY closes at or above $6.95 on 19-Feb-2021. Based on our risk-neutral analysis, there is a 54.38% 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.