Synthetic Long Discount Alert: REDBOX ENTERTAINMENT INC. CLASS A COMMON STOCK $RDBX trading at a 60.45% discount for the 20-Jan-2023 expiration

Quantchabot has detected a promising Synthetic Long Stock trade opportunity for REDBOX ENTERTAINMENT INC. CLASS A COMMON STOCK (RDBX) for the 20-Jan-2023 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

RDBX was recently trading at $12.01 and has an implied volatility of 191.37% for this period. Based on an analysis of the options available for RDBX expiring on 20-Jan-2023, there is a 68.29% likelihood that the underlying will close within the analyzed range of $2.80-$52.82 at expiration. In this scenario, the average linear return for the trade would be 268.10%.

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 $12.00, which is already $0.01 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 $7.25 per share. The final position can be considered as having a discount of $7.26 per share over the underlying price of $12.01 for a 60.45% 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.