BEKE Overpriced Put Spread has 5% Downside Cushion


Re-Tweet
Share on LinkedIn

This BEKE Credit Put Spread Could Turn 35% Profit in 4 Days

Bullish play with a target stock price of $22 or above

Strategy has +35% upside potential and 37% overvalued


Expiration04-Oct-24
Buy20 Put
Sell22 Put
Credit:$0.52


Ke Holdings American Depositary Shares (Each Representing Three Class A Ordinary Shares) price is now up +13.0% today to $22.59. The above option strategy is a bullish play that shows a theoretical 74% win rate, based on BEKE's historical stock price behavior.

Option Profit Calculator for BEKE Put Spread at 04-Oct-24 Expiration

If BEKE stock price at expiration is at or above $22.00, this spread has a 35% upside potential

The optimal stock price for this option strategy is to close at or above $22.00 on the expiration date, October 4, 2024. In that scenario, both puts would expire worthless, allowing you to keep the entire $0.52 you received when selling the spread. That corresponds to a potential +35% return on the amount at risk with 4 days left until expiration.

The maximum gain will be realized if the stock price is at or above 22.00. The maximum gain is $0.52

The breakeven point is at 21.48, which is 5.0% below the current spot price.

The maximum loss will occur when the stock price is at or below 20. The max loss is $1.48.

BEKE Spread Current Market Price vs. Historical Average

BEKE Put Spread is trading at a 37% premium to historical average.

Using historical data to measure how a similar spread in BEKE was priced in the market, the 4-year average value was 0.38, with a high mark of 0.66 and a low of 0.22.

Currently, this vertical put spread is bid at 0.52 and offered at 0.65. The midpoint of the spread is 0.59.

If we use 0.38 as our historical fair value benchmark, the current market bid price is at a 37% premium, while the current market midpoint represents a 54% premium.

Current PriceHistorical Values of Similar Spreads
BidAskMidpointAverageHighLow
0.520.650.590.380.660.22
Market Chameleon captures daily records of market data to calculate historical benchmarks and generate estimated values.

Takeaway

The BEKE put spread we've identified here can be a good way to play a bullish outlook because the option strategy has a +35% upside potential, is 37% overpriced relative to historical measures, and will benefit from a stock price at or above $22.

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


Videos You Might Like

How to Use Market Chameleon Options Profit Calculator for a Credit Put Spread


How to Use Implied Volatility Skew to Trade a Credit Put Spread



Contact Information:


If you have feedback or concerns about the content, please feel free to reach out to us via email at support@marketchameleon.com.


About the Publisher - Marketchameleon.com:


Marketchameleon is a comprehensive financial research and analysis website specializing in stock and options markets. We leverage extensive data, models, and analytics to provide valuable insights into these markets. Our primary goal is to assist traders in identifying potential market developments and assessing potential risks and rewards.



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.