SQ Bearish Calendar Put Spread with 286% Upside

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This SQ Calendar Put Spread Targets 286% Return

Bearish play with a target stock price of $65

Strategy has +286% upside potential and 18% undervalued

Strategy: Long SQ Calendar Put Spread
Sell 19-May-23 65 Put4.10
Buy 16-Jun-23 65 Put5.10

Block Class A has fallen by -1.1% today to $74.26. The share price is currently in a downtrend, based on SQ moving averages. Setting up this calendar spread with strikes at $65 gives you a bearish bias to tap into SQ stock's weakness.

Option Profit Calculator Results for SQ Calendar Spread at 19-May-23 Expiration

In this scenario, the optimal stock price for the option strategy would be $65.00 on the date of the first expiration, May 19, 2023. This is equal to the strike price of the options in the spread. Since SQ is in a technical downtrend currently, and the strikes are below the current stock price of $74.07, the spread is taking advantage of the stock's downward momentum. If the stock price is $65.00 at expiration, we can benefit from the 19-May-23 put, which we sold, expiring worthless, and the option that we are long, the 16-Jun-23 put, will still have time premium built in.

Since we do now know what the exact implied volatility will be on May 19, we can use our historical data to make an educated estimate to help us calculate the value of the 16-Jun-23 option. Applying the median historical implied volatility of 55.9 from similar options, the theoretical value of the put is 3.86 at the date of the 19-May-23 expiration. Using the above assumptions gives us a potential upside of +286% for this calendar spread.

SQ Calendar Spread Value vs. Market Price

According to Market Chameleon estimated value, SQ Calendar Spread is trading at a 18% discount to historical benchmark.

If we use historical data to measure how similar spreads in SQ were priced in the market, the 4-year average price was 1.22, with a high mark of 1.49 and a low of 1.00.

Currently, the calendar put spread is bid at 0.80 and offered at 1.00. The midpoint of the spread is 0.90.

If we use 1.22 as our historical fair value benchmark, the current market ask price is at a 18% discount, while the current market midpoint represents a 26% discount.

Current PriceHistorical Values of Similar Spreads
Market Chameleon captures daily records of market data to calculate historical benchmarks and generate estimated values.


The SQ calendar put spread we've identified here can be a good way to play a bearish outlook because the option strategy has a +286% upside potential, is 18% underpriced relative to historical measures, and will benefit if the stock continues to trend lower to $65.

See how Market Chameleon can help you make smarter and more efficient trades!

NOTE: Stock and option trading involves risk that may not be suitable for all investors. Examples contained within this report are simulated And may have limitations. Average returns and occurrences are calculated from snapshots of market mid-point prices And were Not actually executed, so they do not reflect actual trades, fees, or execution costs. This report is for informational purposes only, and is not intended to be a recommendation to buy or sell any security. Neither Market Chameleon nor any other party makes warranties regarding results from its usage. Past performance does not guarantee future results. Please consult a financial advisor before executing any trades. You can read more about option risks and characteristics at theocc.com.

The information is provided for informational purposes only and should not be construed as investment advice. All stock price information is provided and transmitted as received from independent third-party data sources. The Information should only be used as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments and trading strategies. The Company does not guarantee the accuracy, completeness or timeliness of the Information.