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Quantchabot has detected a promising Synthetic Long Stock trade opportunity for SYSTEM 1 INC (SST) for the 19-Aug-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
SST was recently trading at $12.89 and has an implied volatility of 85.38% for this period. Based on an analysis of the options available for SST expiring on 19-Aug-2022, there is a 68.31% likelihood that the underlying will close within the analyzed range of $8.11-$20.60 at expiration. In this scenario, the average linear return for the trade would be 78.07%.
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 $12.50, which is already $0.39 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 $1.85 per share. The final position can be considered as having a discount of $2.24 per share over the underlying price of $12.89 for a 17.38% 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.