EFA Overpriced Bear Call Spread has 33% Yield Potential

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This EFA Credit Call Spread Aims for 30% ROI in 2 Days

Bearish play with a target stock price of $70.50 or below

Strategy has +30% upside potential and 17% overvalued

Buy71.5 Call
Sell70.5 Call

iShares MSCI Eafe ETF has seen its price drop -1.6% today to $70.28. The above option strategy is a bearish play that shows a theoretical 74% win rate, based on EFA's historical stock price behavior.

Option Profit Calculator for EFA Call Spread at 02-Jun-23 Expiration

If EFA stock price at expiration is at or below $70.50, this spread has a 30% upside potential

The optimal stock price for this option strategy is to close at or below $70.50 on the expiration date, June 2, 2023. In that scenario, both calls would expire worthless, allowing you to keep the entire $0.23 you received when selling the spread. That corresponds to a potential +30% return on the amount at risk with 2 days left until expiration.

The maximum gain will be realized if the stock price is at or below 70.50. The maximum gain is $0.23

The breakeven point is at 70.73, which is 0.6% above the current spot price.

The maximum loss will occur when the stock price is at or above 71.5. The max loss is $0.77.

EFA Spread Current Market Price vs. Historical Average

EFA Call Spread is trading at a 17% premium to historical average.

Using historical data to measure how a similar spread in EFA was priced in the market, the 4-year average value was 0.20, with a high mark of 0.38 and a low of 0.11.

Currently, this vertical call spread is bid at 0.23 and offered at 0.27. The midpoint of the spread is 0.25.

If we use 0.20 as our historical fair value benchmark, the current market bid price is at a 17% premium, while the current market midpoint represents a 28% premium.

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


The EFA call spread we've identified here can be a good way to play a bearish outlook because the option strategy has a +30% upside potential, is 17% overpriced relative to historical measures, and will benefit from a stock price at or below $70.50.

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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.