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Synthetic Long Discount Alert: SCANA $SCG trading at a 18.81% discount for the 17-Aug-2018 expiration

The automated Quantcha Trade Ideas Service has detected a promising Synthetic Long Stock trade opportunity for SCANA (SCG) for the 17-Aug-2018 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

SCG was recently trading at $47.75 and has an implied volatility of 12.77% for this period. Based on an analysis of the options available for SCG expiring on 17-Aug-2018, there is a 68.27% likelihood that the underlying will close within the analyzed range of $35.68-$65.88 at expiration. In this scenario, the average linear return for the trade would be 95.32%.

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 $50.00, which is already $2.25 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 $11.20 per share. The final position can be considered as having a discount of $8.95 per share over the underlying price of $47.75 for a 18.74% 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.


This is an automated post generated based on a market analysis of delayed data at 1/3/2018 10:16:18 AM ET. The analysis does not include brokerage fees or commissions and is not investment advice.