The automated Quantcha Trade Ideas Service has detected a promising Synthetic Long Stock trade opportunity for CENTURYLINK (CTL) for the 17-Jan-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
CTL was recently trading at $17.39 and has an implied volatility of 24.81% for this period. Based on an analysis of the options available for CTL expiring on 17-Jan-2020, there is a 68.27% likelihood that the underlying will close within the analyzed range of $9.68-$33.15 at expiration. In this scenario, the average linear return for the trade would be 58.09%.
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 $17.00, which is already $0.39 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 $1.60 per share. The final position can be considered as having a discount of $1.99 per share over the underlying price of $17.39 for a 11.44% 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 12/26/2017 11:17:25 AM ET. The analysis does not include brokerage fees or commissions and is not investment advice.