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 $11.05 and has an implied volatility of 192.50% 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 $2.58-$48.74 at expiration. In this scenario, the average linear return for the trade would be 287.85%.
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 $11.00, which is already $0.05 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 $6.45 per share. The final position can be considered as having a discount of $6.50 per share over the underlying price of $11.05 for a 58.82% 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.