The automated Quantcha Trade Ideas Service has detected a promising
LUV was recently trading at $58.29 and has an implied volatility of 24.61% for this period. Based on an analysis of the options available for LUV expiring on 7-Apr-2017, there is a 34.14% likelihood that the underlying will close within the analyzed range of $58.33-$63.39 at expiration. In this scenario, the average linear return for the trade would be 52.96%.
52 week high: SOUTHWEST AIRLINES recently reached a new 52-week high at $58.57. LUV had traded in the range $35.42-$58.56 over the past year.
Trade approach: Reaching a new 52-week high is a bullish indicator, so this trade is designed to be profitable if LUV maintains its current direction and does not revert back to pricing on the bearish side of $58.29 on 7-Apr-2017. If possible, the trade has been padded such that slight movement against the trade would still return a profit.
Upside potential: Using this bullish strategy, the trade would be profitable if SOUTHWEST AIRLINES closes at or above $58.20 on 7-Apr-2017. Based on our risk-neutral analysis, there is a 51.09% 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 2/28/2017 12:25:29 PM ET. The analysis does not include brokerage fees or commissions and is not investment advice.