Synthetic Long Discount Alert: VMWARE $VMW trading at a 11.89% discount for the 19-Jan-2024 expiration

Quantchabot has detected a promising Synthetic Long Stock trade opportunity for VMWARE (VMW) for the 19-Jan-2024 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

VMW was recently trading at $166.96 and has an implied volatility of 59.03% for this period. Based on an analysis of the options available for VMW expiring on 19-Jan-2024, there is a 68.31% likelihood that the underlying will close within the analyzed range of $125.47-$228.91 at expiration. In this scenario, the average linear return for the trade would be 58.25%.

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 $167.60, which is already $0.64 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 $20.50 per share. The final position can be considered as having a discount of $19.86 per share over the underlying price of $166.96 for a 11.89% 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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