Synthetic Long Discount Alert: BIT MINING LTD $BTCM trading at a 28.26% discount for the 19-Jan-2024 expiration

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Quantchabot has detected a promising Synthetic Long Stock trade opportunity for BIT MINING LTD (BTCM) for the 19-Jan-2024 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

BTCM was recently trading at $9.06 and has an implied volatility of 100.87% for this period. Based on an analysis of the options available for BTCM expiring on 19-Jan-2024, there is a 68.27% likelihood that the underlying will close within the analyzed range of $2.00-$41.62 at expiration. In this scenario, the average linear return for the trade would be 111.96%.

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 $10.00, which is already $0.94 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 $3.50 per share. The final position can be considered as having a discount of $2.56 per share over the underlying price of $9.06 for a 28.26% 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.