The automated Quantcha Trade Ideas Service has detected a promising
BIDU was recently trading at $172.97 and has an implied volatility of 28.30% for this period. Based on an analysis of the options available for BIDU expiring on 15-Sep-2017, there is a 35.61% likelihood that the underlying will close within the analyzed range of $166.40-$203.38 at expiration. In this scenario, the average linear return for the trade would be 79.08%.
Price target: Zacks Research has updated their six-month price target for BIDU to $184.89. This price target is a consensus price created from the price targets published by 9 participating analysts whose targets ranged from $126.00 to $220.00.
Mean recommendation: Zacks normalizes analyst recommendations to a 1-5 scale where 1 indicates a strong buy. Their mean recommendation for BIDU has been updated to 2.4, which indicates a buy consensus from analysts. Sentiment has moved from 2.05 to 2.05 to 2.27 over the past three months.
Trade approach: The difference between the current price for BIDU and the mean price target is $15.03, which represents a 6.89% move (14.47% annualized). Since the 180-day implied volatility for BIDU is 28.35%, 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 BAIDU closed in the range $165.40-$204.60 on 15-Sep-2017. Based on our analysis, there is a 37.58% likelihood of this return. The maximum return for this trade would be 85.19% if BAIDU closed in the range $170.00-$200.00.
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 2/28/2017 10:24:31 AM ET. The analysis does not include brokerage fees or commissions and is not investment advice.