The automated Quantcha Trade Ideas Service has detected a promising Synthetic Long Stock trade opportunity for GOLAR LNG PARTNERS (GMLP) for the 17-Jan-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
GMLP was recently trading at $18.84 and has an implied volatility of 9.41% for this period. Based on an analysis of the options available for GMLP expiring on 17-Jan-2020, there is a 68.27% likelihood that the underlying will close within the analyzed range of $13.09-$29.06 at expiration. In this scenario, the average linear return for the trade would be 68.25%.
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 $20.00, which is already $1.17 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 $3.50 per share. The final position can be considered as having a discount of $2.34 per share over the underlying price of $18.84 for a 12.40% 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 3/12/2018 11:16:46 AM ET. The analysis does not include brokerage fees or commissions and is not investment advice.