Synthetic Long Discount Alert: EVE HOLDING INC $EVEX trading at a 23.96% discount for the 21-Jul-2023 expiration

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

EVEX was recently trading at $6.51 and has an implied volatility of 113.29% for this period. Based on an analysis of the options available for EVEX expiring on 21-Jul-2023, there is a 68.30% likelihood that the underlying will close within the analyzed range of $3.02-$14.69 at expiration. In this scenario, the average linear return for the trade would be 115.26%.

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 $7.50, which is already $0.99 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 $2.55 per share. The final position can be considered as having a discount of $1.56 per share over the underlying price of $6.51 for a 23.96% 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.