Synthetic Long Discount Alert: EVE HOLDING INC $EVEX trading at a 35.80% discount for the 21-Apr-2023 expiration

Quantchabot has detected a promising Synthetic Long Stock trade opportunity for EVE HOLDING INC (EVEX) for the 21-Apr-2023 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

EVEX was recently trading at $12.85 and has an implied volatility of 104.74% for this period. Based on an analysis of the options available for EVEX expiring on 21-Apr-2023, there is a 68.29% likelihood that the underlying will close within the analyzed range of $5.92-$29.19 at expiration. In this scenario, the average linear return for the trade would be 177.10%.

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 $12.50, which is already $0.35 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 $4.25 per share. The final position can be considered as having a discount of $4.60 per share over the underlying price of $12.85 for a 35.80% 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.