The automated Quantcha Trade Ideas Service has detected a promising
DFS was recently trading at $67.87 and has an implied volatility of 18.95% for this period. Based on an analysis of the options available for DFS expiring on 20-Oct-2017, there is a 38.02% likelihood that the underlying will close within the analyzed range of $68.46-$83.68 at expiration. In this scenario, the average linear return for the trade would be 64.08%.
Price target: Zacks Research has updated their six-month price target for DFS to $76.07. This price target is a consensus price created from the price targets published by 14 participating analysts whose targets ranged from $59.00 to $87.00.
Mean recommendation: Zacks normalizes analyst recommendations to a 1-5 scale where 1 indicates a strong buy. Their mean recommendation for DFS has been updated to 1.53, which indicates a buy consensus from analysts. Sentiment has moved from 1.65 to 1.53 to 1.50 over the past three months.
Trade approach: The difference between the current price for DFS and the mean price target is $10.13, which represents a 12.08% move (26.03% annualized). Since the 180-day implied volatility for DFS is 21.44%, 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 DISCOVER FINANCIAL closed at or above $68.00 on 20-Oct-2017. Based on our analysis, there is a 49.99% 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 3/28/2017 2:20:24 PM ET. The analysis does not include brokerage fees or commissions and is not investment advice.