Synthetic Long Discount Alert: AGNC INVESTMENT CORP $AGNC trading at a 10.29% discount for the 17-Jan-2020 expiration

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

AGNC was recently trading at $19.01 and has an implied volatility of 3.48% for this period. Based on an analysis of the options available for AGNC expiring on 17-Jan-2020, there is a 68.27% likelihood that the underlying will close within the analyzed range of $15.77-$24.51 at expiration. In this scenario, the average linear return for the trade would be 71.07%.

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 $1.00 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 $2.95 per share. The final position can be considered as having a discount of $1.96 per share over the underlying price of $19.01 for a 10.29% 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 8/10/2018 10:46:01 AM ET. The analysis does not include brokerage fees or commissions and is not investment advice.