The automated Quantcha Trade Ideas Service has detected a promising
VALE was recently trading at $10.36 and has an implied volatility of 46.20% for this period. Based on an analysis of the options available for VALE expiring on 15-Sep-2017, there is a 20.70% likelihood that the underlying will close within the analyzed range of $10.15-$12.41 at expiration. In this scenario, the average linear return for the trade would be 134.93%.
Price target: Zacks Research has updated their six-month price target for VALE to $11.28. This price target is a consensus price created from the price targets published by 6 participating analysts whose targets ranged from $8.00 to $14.20.
Mean recommendation: Zacks normalizes analyst recommendations to a 1-5 scale where 1 indicates a strong buy. Their mean recommendation for VALE has been updated to 2.11, which indicates a buy consensus from analysts. Sentiment has moved from 2.40 to 2.56 to 2.20 over the past three months.
Trade approach: The difference between the current price for VALE and the mean price target is $0.89, which represents a 8.91% move (18.89% annualized). Since the 180-day implied volatility for VALE is 50.85%, 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 VALE closed in the range $9.69-$13.62 on 15-Sep-2017. Based on our analysis, there is a 33.96% likelihood of this return. The maximum return for this trade would be 189.86% if VALE closed at $11.00.
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 12:19:40 PM ET. The analysis does not include brokerage fees or commissions and is not investment advice.