Price Target Alert: Trading the Zacks price target change for STATOIL ASA
The automated Quantcha Trade Ideas Service has detected a promising
STO was recently trading at $17.53 and has an implied volatility of 19.17% for this period. Based on an analysis of the options available for STO expiring on 21-Jul-2017, there is a 40.50% likelihood that the underlying will close within the analyzed range of $17.67-$21.60 at expiration. In this scenario, the average linear return for the trade would be 51.01%.
Price target: Zacks Research has updated their six-month price target for STO to $19.63. This price target is a consensus price created from the price targets published by 3 participating analysts whose targets ranged from $17.00 to $22.90.
Mean recommendation: Zacks normalizes analyst recommendations to a 1-5 scale where 1 indicates a strong buy. Their mean recommendation for STO has been updated to 2.8, which indicates a hold consensus from analysts. Sentiment has moved from 2.60 to 2.67 to 2.80 over the past three months.
Trade approach: The difference between the current price for STO and the mean price target is $1.47, which represents a 12.00% move (25.83% annualized). Since the 180-day implied volatility for STO is 23.41%, a bullish strategy could prove effective if the price target ultimately turns out to be accurate.
Upside potential: Using this bullish strategy, the trade would be profitable if STATOIL ASA closed at or above $17.35 on 21-Jul-2017. Based on our analysis, there is a 54.55% 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.
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This is an automated post generated based on a market analysis of delayed data at 2/17/2017 1:21:28 PM ET. The analysis does not include brokerage fees or commissions and is not investment advice.