The automated Quantcha Trade Ideas Service has detected a promising Bear Call Spread trade opportunity for TRAVELERS COMPANIES (TRV) for the 19-Jan-2018 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

TRV was recently trading at $127.10 and has an implied volatility of 11.66% for this period. Based on an analysis of the options available for TRV expiring on 19-Jan-2018, there is a 57.88% likelihood that the underlying will close within the analyzed range of $107.82-$131.78 at expiration. In this scenario, the average linear return for the trade would be 32.10%.

Price target: Zacks Research has updated their six-month price target for TRV to $119.80. This price target is a consensus price created from the price targets published by 10 participating analysts whose targets ranged from $95.00 to $135.00.

Mean recommendation: Zacks normalizes analyst recommendations to a 1-5 scale where 1 indicates a strong buy. Their mean recommendation for TRV has been updated to 2.62, which indicates a hold consensus from analysts. Sentiment has moved from 2.89 to 2.75 to 2.62 over the past three months.

Trade approach: The difference between the current price for TRV and the mean price target is $7.60, which represents a 5.74% move (11.99% annualized). Since the 180-day implied volatility for TRV is 13.22%, a bearish strategy could prove effective if the price target ultimately turns out to be accurate.

Upside potential: Using this bearish strategy, the trade would be profitable if TRAVELERS COMPANIES closed at or below $132.50 on 19-Jan-2018. Based on our analysis, there is a 65.66% 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.