Synthetic Long Discount Alert: CLOVIS ONCOLOGY $CLVS trading at a 15.37% discount for the 15-Jan-2021 expiration

Quantcha now offering unlimited commission-free options trading.

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

CLVS was recently trading at $10.28 and has an implied volatility of 73.72% for this period. Based on an analysis of the options available for CLVS expiring on 15-Jan-2021, there is a 68.27% likelihood that the underlying will close within the analyzed range of $3.52-$31.37 at expiration. In this scenario, the average linear return for the trade would be 71.98%.

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 $10.00, which is already $0.28 in the money. An out-of-the-money put at the same strike is sold to finance the call, resulting in a net credit of $1.30 per share. The final position can be considered as having a discount of $1.58 per share over the underlying price of $10.28 for a 15.38% 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.