Synthetic Long Discount Alert: APHRIA INC $APHA trading at a 10.08% discount for the 15-Jan-2021 expiration

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

APHA was recently trading at $6.90 and has an implied volatility of 41.59% for this period. Based on an analysis of the options available for APHA expiring on 15-Jan-2021, there is a 68.27% likelihood that the underlying will close within the analyzed range of $3.38-$15.17 at expiration. In this scenario, the average linear return for the trade would be 57.39%.

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 $7.50, which is already $0.60 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 $1.30 per share. The final position can be considered as having a discount of $0.70 per share over the underlying price of $6.90 for a 10.14% 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 6/17/2019 2:00:24 PM ET. The analysis does not include brokerage fees or commissions and is not investment advice.