The automated Quantcha Trade Ideas Service has detected a promising Synthetic Long Stock trade opportunity for MARATHON PATENT GROUP INC. CO (MARA) for the 15-Dec-2017 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
MARA was recently trading at $8.70 and has an implied volatility of 0.00% for this period. Based on an analysis of the options available for MARA expiring on 15-Dec-2017, there is a 68.27% likelihood that the underlying will close within the analyzed range of $4.02-$20.09 at expiration. In this scenario, the average linear return for the trade would be 77.62%.
Upside potential: This synthetic long position offers the same potential benefits and liabilities as a long stock position, but at a discount due to the significant premium at-the-money puts are trading at over calls. In this case, the long call position is opened at a strike of $5.00, which is already $3.70 in the money. An out-of-the-money put at the same strike is sold to finance the call, resulting in a net debit of $2.00 per share. The final position can be considered as having a discount of $1.70 per share over the underlying price of $8.70 for a 19.54% total.
Downside risk: This discount is generally a sign of the stock facing considerable short pressure, and may indicate that the stock has become hard to borrow. However, if you have a long view of the underlying over this period, it could be a good opportunity to benefit from the upside at a major discount.
To analyze this trade in depth, please visit the Quantcha Options Search Engine.
This is an automated post generated based on a market analysis of delayed data at 11/27/2017 10:04:24 AM ET. The analysis does not include brokerage fees or commissions and is not investment advice.