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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 $6.21 and has an implied volatility of 37.27% 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 $2.90-$14.02 at expiration. In this scenario, the average linear return for the trade would be 70.05%.
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 $1.21 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 $0.30 per share. The final position can be considered as having a discount of $0.91 per share over the underlying price of $6.21 for a 14.65% 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 8/29/2019 10:33:41 AM ET. The analysis does not include brokerage fees or commissions and is not investment advice.