The automated Quantcha Trade Ideas Service has detected a promising
AIG was recently trading at $64.00 and has an implied volatility of 18.43% for this period. Based on an analysis of the options available for AIG expiring on 18-Aug-2017, there is a 51.82% likelihood that the underlying will close within the analyzed range of $59.97-$73.30 at expiration. In this scenario, the average linear return for the trade would be 45.65%.
Price target: Zacks Research has updated their six-month price target for AIG to $66.64. This price target is a consensus price created from the price targets published by 11 participating analysts whose targets ranged from $57.00 to $75.00.
Mean recommendation: Zacks normalizes analyst recommendations to a 1-5 scale where 1 indicates a strong buy. Their mean recommendation for AIG has been updated to 2.08, which indicates a buy consensus from analysts. Sentiment has moved from 2.15 to 2.15 to 2.09 over the past three months.
Trade approach: The difference between the current price for AIG and the mean price target is $4.00, which represents a 4.12% move (8.53% annualized). Since the 180-day implied volatility for AIG is 19.88%, 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 AMERICAN INTERNATIONAL closed in the range $59.20-$73.30 on 18-Aug-2017. Based on our analysis, there is a 55.19% likelihood of this return. The maximum return for this trade would be 47.06% if AMERICAN INTERNATIONAL closed in the range $60.00-$72.50.
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 10:23:24 AM ET. The analysis does not include brokerage fees or commissions and is not investment advice.