Under Armour has recently been under scrutiny for its revenue recognition. A couple weeks ago the SEC announced that they will undergo investigation on UAA (Under Armour). This has caused a great opportunity to place a long call or put because of the massive volatility that it will cause the stock to have. If the SEC reports that there are no findings the stock will jump back up and if they do report findings the stock will jump down. If you are able to guess right on what will happen you will be able to make a lot of money from this.
If you look at the graph above it shows you your potential earnings off of a call or put option. If you were investing in a call or put the X would be what your strike price is and after you reach that price your payoff drastically increases. If you weren't able to reach your strike price the only loss you would incur is how much you paid for you option. So, it is limited risk with great earnings if the stock was to go past your strike price.
When calculating the option price for $30 call and $10 put at January 15, 2021 I was around $20 dollars off for both of them. This could be from the sigma or current interest rate. It's difficult to find the exact sigma as the market is constantly changing, I was able to calculate mine by going off of the past year performance of Under Armour.
After doing some research I believe that the SEC will report that there are no findings for UAA. Revenue recognition is a major aspect of a company and I have a hard time believing that if their external auditors, PwC, were okay with how they recognizes revenue that the SEC wouldn't be. Also, PwC is considered the second best auditors out of the Big 4 for botched audits. They have a good reputation and I believe that they have done their due diligence and that there is nothing that the SEC will find.
If you were able to buy the $30 call for $67 and the SEC were able to clear UAA of no wrong doing, here is how you would calculate your return. So your break even would be $30.67, since the cost was $67 and you buy the right to 100 shares every .01 that the stock goes up you get $1 in return. So, for every cent above $30.67 you will receive $1 dollar. Although if you are wanting to buy a call I would purchase a lower strike price. Before the SEC came out with the investigate the stock price was around $21 so I have a hard time believing that it would reach $30 if the SEC would clear them.