Synthetic Long Discount Alert: DIREXION DAILY JR GOLD BEAR $JDST trading at a 9.99% discount for the 17-Jan-2020 expiration

The automated Quantcha Trade Ideas Service has detected a promising Synthetic Long Stock trade opportunity for DIREXION DAILY JR GOLD BEAR (JDST) for the 17-Jan-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

JDST was recently trading at $76.01 and has an implied volatility of 81.83% for this period. Based on an analysis of the options available for JDST expiring on 17-Jan-2020, there is a 68.27% likelihood that the underlying will close within the analyzed range of $17.25-$354.63 at expiration. In this scenario, the average linear return for the trade would be 72.02%.

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 $76.00, which is already $0.01 in the money. An out-of-the-money put at the same strike is sold to finance the call, resulting in a net credit of $7.60 per share. The final position can be considered as having a discount of $7.61 per share over the underlying price of $76.01 for a 10.01% 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 12/7/2017 12:59:00 PM ET. The analysis does not include brokerage fees or commissions and is not investment advice.