Synthetic Long Discount Alert: CO-DIAGNOSTICS INC. COMMON STOCK $CODX trading at a 10.21% discount for the 21-Jan-2022 expiration

Quantcha now offering unlimited commission-free options trading.

Quantchabot has detected a promising Synthetic Long Stock trade opportunity for CO-DIAGNOSTICS INC. COMMON STOCK (CODX) for the 21-Jan-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

CODX was recently trading at $16.26 and has an implied volatility of 128.77% for this period. Based on an analysis of the options available for CODX expiring on 21-Jan-2022, there is a 68.27% likelihood that the underlying will close within the analyzed range of $4.01-$66.51 at expiration. In this scenario, the average linear return for the trade would be 70.34%.

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 $15.00, which is already $1.26 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 $0.40 per share. The final position can be considered as having a discount of $1.66 per share over the underlying price of $16.26 for a 10.21% 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.