The automated Quantcha Trade Ideas Service has detected a promising Long Iron Butterfly trade opportunity for PETROLEO BRASILEIRO SA (PBR) for the 20-Apr-2018 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

PBR was recently trading at $10.48 and has an implied volatility of 34.96% for this period. Based on an analysis of the options available for PBR expiring on 20-Apr-2018, there is a 31.01% likelihood that the underlying will close within the analyzed range of $10.06-$12.30 at expiration. In this scenario, the average linear return for the trade would be 129.75%.

Price target: Zacks Research has updated their six-month price target for PBR to $11.18. This price target is a consensus price created from the price targets published by 5 participating analysts whose targets ranged from $10.00 to $12.50.

Mean recommendation: Zacks normalizes analyst recommendations to a 1-5 scale where 1 indicates a strong buy. Their mean recommendation for PBR has been updated to 2.92, which indicates a hold consensus from analysts. Sentiment has moved from 2.69 to 2.36 to 2.58 over the past three months.

Trade approach: The difference between the current price for PBR and the mean price target is $0.93, which represents a 6.73% move (14.12% annualized). Since the 180-day implied volatility for PBR is 34.68%, 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 PETROLEO BRASILEIRO SA closed in the range $9.63-$12.37 on 20-Apr-2018. Based on our analysis, there is a 38.58% likelihood of this return. The maximum return for this trade would be 217.46% if PETROLEO BRASILEIRO SA closed in the range $11.00-$11.00.

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.