Synthetic Long Discount Alert: HELIOS AND MATHESON ANALYTICS $HMNY trading at a 11.26% discount for the 17-Aug-2018 expiration

The automated Quantcha Trade Ideas Service has detected a promising Synthetic Long Stock trade opportunity for HELIOS AND MATHESON ANALYTICS (HMNY) for the 17-Aug-2018 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

HMNY was recently trading at $5.85 and has an implied volatility of 128.16% for this period. Based on an analysis of the options available for HMNY expiring on 17-Aug-2018, there is a 68.27% likelihood that the underlying will close within the analyzed range of $1.43-$24.78 at expiration. In this scenario, the average linear return for the trade would be 75.47%.

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 $0.85 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 $0.20 per share. The final position can be considered as having a discount of $0.65 per share over the underlying price of $5.85 for a 11.11% 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 1:18:37 PM ET. The analysis does not include brokerage fees or commissions and is not investment advice.