Quantchabot has detected a promising Synthetic Long Stock trade opportunity for UPSTART HOLDINGS INC. COMMON STOCK (UPST) for the 17-Jan-2025 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
UPST was recently trading at $12.19 and has an implied volatility of 99.37% for this period. Based on an analysis of the options available for UPST expiring on 17-Jan-2025, there is a 68.28% likelihood that the underlying will close within the analyzed range of $3.61-$48.57 at expiration. In this scenario, the average linear return for the trade would be 137.67%.
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 $12.50, which is already $0.31 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 $3.85 per share. The final position can be considered as having a discount of $3.54 per share over the underlying price of $12.19 for a 29.04% 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.
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