Quantcha now offering unlimited commission-free options trading.
Quantchabot has detected a promising Synthetic Long Stock trade opportunity for CBAK ENERGY TECHNOLOGY INC. COMMON STOCK (CBAT) for the 16-Jul-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
CBAT was recently trading at $6.37 and has an implied volatility of 142.22% for this period. Based on an analysis of the options available for CBAT expiring on 16-Jul-2021, there is a 68.27% likelihood that the underlying will close within the analyzed range of $2.61-$15.54 at expiration. In this scenario, the average linear return for the trade would be 64.21%.
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 $7.50, which is already $1.13 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 $2.16 per share. The final position can be considered as having a discount of $1.03 per share over the underlying price of $6.37 for a 16.17% 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.