The automated Quantcha Trade Ideas Service has detected a promising trade opportunity for ILLINOIS TOOL WORKS () for the 19-Jan-2018 expiration period. You can analyze the opportunity in depth over at the .
ITW was recently trading at $141.29 and has an implied volatility of 16.68% for this period. Based on an analysis of the options available for ITW expiring on 19-Jan-2018, there is a 56.78% likelihood that the underlying will close within the analyzed range of $134.50-$164.39 at expiration. In this scenario, the average linear return for the trade would be 28.00%.
Price target: Zacks Research has updated their six-month price target for ITW to $149.44. This price target is a consensus price created from the price targets published by 9 participating analysts whose targets ranged from $140.00 to $162.00.
Mean recommendation: Zacks normalizes analyst recommendations to a 1-5 scale where 1 indicates a strong buy. Their mean recommendation for ITW has been updated to 2.17, which indicates a buy consensus from analysts. Sentiment has moved from 2.08 to 2.17 to 2.17 over the past three months.
Trade approach: The difference between the current price for ITW and the mean price target is $5.71, which represents a 5.77% move (12.05% annualized). Since the 180-day implied volatility for ITW is 16.42%, 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 ILLINOIS TOOL WORKS closed in the range $133.90-$166.10 on 19-Jan-2018. Based on our analysis, there is a 59.60% likelihood of this return. The maximum return for this trade would be 28.21% if ILLINOIS TOOL WORKS closed in the range $135.00-$165.00.
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 .
This is an automated post generated based on a market analysis of delayed data at 7/26/2017 12:12:24 PM ET. The analysis does not include brokerage fees or commissions and is not investment advice.