Synthetic Long Discount Alert: LIVEWIRE GROUP INC $LVWR trading at a 18.75% discount for the 20-Oct-2023 expiration

Quantchabot has detected a promising Synthetic Long Stock trade opportunity for LIVEWIRE GROUP INC (LVWR) for the 20-Oct-2023 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

LVWR was recently trading at $6.58 and has an implied volatility of 121.09% for this period. Based on an analysis of the options available for LVWR expiring on 20-Oct-2023, there is a 68.29% likelihood that the underlying will close within the analyzed range of $2.65-$17.37 at expiration. In this scenario, the average linear return for the trade would be 108.25%.

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 $0.92 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 $1.23 per share over the underlying price of $6.58 for a 18.75% 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.