Synthetic Long Discount Alert: CHESAPEAKE ENERGY $CHK trading at a 20.22% discount for the 21-Jan-2022 expiration

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Quantchabot has detected a promising Synthetic Long Stock trade opportunity for CHESAPEAKE ENERGY (CHK) for the 21-Jan-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

CHK was recently trading at $27.20 and has an implied volatility of 142.94% for this period. Based on an analysis of the options available for CHK expiring on 21-Jan-2022, there is a 68.27% likelihood that the underlying will close within the analyzed range of $4.20-$182.09 at expiration. In this scenario, the average linear return for the trade would be 124.03%.

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 long call position is opened at a strike of $25.00, which is already $2.20 in the money. An out-of-the-money put at the same strike is sold to finance the call, resulting in a net credit of $3.30 per share. The final position can be considered as having a discount of $5.50 per share over the underlying price of $27.20 for a 20.22% total.

