Synthetic Long Discount Alert: HI-CRUSH PARTNERS $HCLP trading at a 13.07% discount for the 15-Jan-2021 expiration

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Quantchabot has detected a promising Synthetic Long Stock trade opportunity for HI-CRUSH PARTNERS (HCLP) for the 15-Jan-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

HCLP was recently trading at $9.03 and has an implied volatility of 26.17% for this period. Based on an analysis of the options available for HCLP expiring on 15-Jan-2021, there is a 68.27% likelihood that the underlying will close within the analyzed range of $3.55-$26.32 at expiration. In this scenario, the average linear return for the trade would be 96.92%.

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 $10.00, which is already $0.97 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 $2.15 per share. The final position can be considered as having a discount of $1.18 per share over the underlying price of $9.03 for a 13.07% 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 10/17/2018 10:41:45 AM ET. The analysis does not include brokerage fees or commissions and is not investment advice.