Synthetic Long Discount Alert: HI-CRUSH PARTNERS $HCLP trading at a 16.67% discount for the 17-Jan-2020 expiration

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Quantchabot has detected a promising Synthetic Long Stock trade opportunity for HI-CRUSH PARTNERS (HCLP) for the 17-Jan-2020 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

HCLP was recently trading at $11.28 and has an implied volatility of 32.12% for this period. Based on an analysis of the options available for HCLP expiring on 17-Jan-2020, there is a 68.27% likelihood that the underlying will close within the analyzed range of $6.38-$21.53 at expiration. In this scenario, the average linear return for the trade would be 83.09%.

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 $12.50, which is already $1.22 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 $3.10 per share. The final position can be considered as having a discount of $1.88 per share over the underlying price of $11.28 for a 16.67% 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 10/10/2018 10:39:35 AM ET. The analysis does not include brokerage fees or commissions and is not investment advice.