Synthetic Long Discount Alert: SYSTEM 1 INC $SST trading at a 13.83% discount for the 19-Aug-2022 expiration

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 $9.11 and has an implied volatility of 106.95% for this period. Based on an analysis of the options available for SST expiring on 19-Aug-2022, there is a 68.34% likelihood that the underlying will close within the analyzed range of $5.90-$14.12 at expiration. In this scenario, the average linear return for the trade would be 63.14%.

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 $0.89 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 $2.15 per share. The final position can be considered as having a discount of $1.26 per share over the underlying price of $9.11 for a 13.83% 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.