Synthetic Long Discount Alert: ENERGOUS CORPORATION COMMON ST $WATT trading at a 10.10% discount for the 17-Jan-2020 expiration

Quantcha now offering unlimited commission-free options trading.

Quantchabot has detected a promising Synthetic Long Stock trade opportunity for ENERGOUS CORPORATION COMMON ST (WATT) for the 17-Jan-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

WATT was recently trading at $5.84 and has an implied volatility of 70.60% for this period. Based on an analysis of the options available for WATT expiring on 17-Jan-2020, there is a 68.27% likelihood that the underlying will close within the analyzed range of $2.56-$13.87 at expiration. In this scenario, the average linear return for the trade would be 55.74%.

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 long call position is opened at a strike of $5.00, which is already $0.84 in the money. An out-of-the-money put at the same strike is sold to finance the call, resulting in a net debit of $0.25 per share. The final position can be considered as having a discount of $0.59 per share over the underlying price of $5.84 for a 10.07% 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 4/12/2019 11:29:35 AM ET. The analysis does not include brokerage fees or commissions and is not investment advice.