The market may have already priced in all major drivers that impact a company’s valuation. Assessing future dynamics through the Markov property, where future states depend on the current state, can provide insights. Securities never enter a neutral state and past context influences future behaviors, creating opportunities for profit.

Salesforce (CRM) stock has dropped nearly 14% since January and 32% over the past year. Traders are prioritizing downside protection based on put activity, anticipating higher probability of downside. A bull call spread on CRM stock could be profitable, with a maximum payout of over 108% if the stock rises through the $237.50 strike at expiration.

Mosaic (MOS) stock has gained 19.51% year-to-date despite a Weak Sell rating. Traders are prioritizing downside insurance, anticipating negative movements. A bear put spread on MOS stock could yield almost 84% maximum payout if the stock falls through the $27.50 strike. Contextual analysis of market behaviors can provide valuable insights for traders.

Read more at Barchart: Using Inductive Reasoning to Identify Options Trading Opportunities