The automated Quantcha Trade Ideas Service has detected a promising
BK was recently trading at $46.89 and has an implied volatility of 19.47% for this period. Based on an analysis of the options available for BK expiring on 15-Sep-2017, there is a 44.32% likelihood that the underlying will close within the analyzed range of $45.57-$55.70 at expiration. In this scenario, the average linear return for the trade would be 37.33%.
Price target: Zacks Research has updated their six-month price target for BK to $50.64. This price target is a consensus price created from the price targets published by 11 participating analysts whose targets ranged from $44.00 to $57.00.
Mean recommendation: Zacks normalizes analyst recommendations to a 1-5 scale where 1 indicates a strong buy. Their mean recommendation for BK has been updated to 2.31, which indicates a buy consensus from analysts. Sentiment has moved from 2.08 to 2.23 to 2.31 over the past three months.
Trade approach: The difference between the current price for BK and the mean price target is $5.11, which represents a 7.99% move (16.87% annualized). Since the 180-day implied volatility for BK is 20.36%, 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 BANK OF NEW YORK MELLON closed in the range $45.55-$56.45 on 15-Sep-2017. Based on our analysis, there is a 46.24% likelihood of this return. The maximum return for this trade would be 40.85% if BANK OF NEW YORK MELLON closed in the range $47.00-$55.00.
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 12:20:11 PM ET. The analysis does not include brokerage fees or commissions and is not investment advice.