Synthetic Long Discount Alert: BP PRUDHOE BAY $BPT trading at a 21.88% discount for the 20-Sep-2019 expiration

Quantcha now offering unlimited commission-free options trading.

Quantchabot has detected a promising Synthetic Long Stock trade opportunity for BP PRUDHOE BAY (BPT) for the 20-Sep-2019 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

BPT was recently trading at $24.01 and has an implied volatility of 20.87% for this period. Based on an analysis of the options available for BPT expiring on 20-Sep-2019, there is a 68.27% likelihood that the underlying will close within the analyzed range of $14.44-$41.27 at expiration. In this scenario, the average linear return for the trade would be 103.02%.

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 $25.00, which is already $0.99 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 $6.25 per share. The final position can be considered as having a discount of $5.26 per share over the underlying price of $24.01 for a 21.91% 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 2/12/2019 10:42:04 AM ET. The analysis does not include brokerage fees or commissions and is not investment advice.