Synthetic Long Discount Alert: RIOT BLOCKCHAIN INC. COMMON STOCK $RIOT trading at a 20.96% discount for the 17-Jan-2020 expiration

The automated Quantcha Trade Ideas Service has detected a promising Synthetic Long Stock trade opportunity for RIOT BLOCKCHAIN INC. COMMON STOCK (RIOT) for the 17-Jan-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

RIOT was recently trading at $17.50 and has an implied volatility of 48.34% for this period. Based on an analysis of the options available for RIOT expiring on 17-Jan-2020, there is a 68.27% likelihood that the underlying will close within the analyzed range of $5.14-$63.24 at expiration. In this scenario, the average linear return for the trade would be 93.28%.

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 put position is opened at a strike of $18.00, which is already $0.50 in-the-money. However, its sale more than offsets this moneyness and the cost of the long call that the trade results in a net credit of of $4.20 per share. The final position can be considered as having a discount of $3.70 per share over the underlying price of $17.50 for a 21.13% 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 2/15/2018 10:21:34 AM ET. The analysis does not include brokerage fees or commissions and is not investment advice.