Synthetic Long Discount Alert: INNOVATE BIOPHARMACEUTICALS INC. COMMON STOCK $INNT trading at a 35.21% discount for the 15-Feb-2019 expiration

The automated Quantcha Trade Ideas Service has detected a promising Synthetic Long Stock trade opportunity for INNOVATE BIOPHARMACEUTICALS INC. COMMON STOCK (INNT) for the 15-Feb-2019 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

INNT was recently trading at $22.35 and has an implied volatility of 42.27% for this period. Based on an analysis of the options available for INNT expiring on 15-Feb-2019, there is a 68.27% likelihood that the underlying will close within the analyzed range of $7.59-$68.58 at expiration. In this scenario, the average linear return for the trade would be 132.39%.

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 $22.50, which is already $0.15 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 $8.00 per share. The final position can be considered as having a discount of $7.85 per share over the underlying price of $22.35 for a 35.11% 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 7/10/2018 10:42:31 AM ET. The analysis does not include brokerage fees or commissions and is not investment advice.