Chris,
When you refer a link or "push" a service, and if you are directly or
indirectly getting compensated for it, I request you and everyone to
add a disclosure to every such post.
There is nothing wrong in getting compensated, but a reader of the
post should know if it is a "paid" post or if the referral is coming
from someone who is a "true consumer" of the service/product.
I hope you and others agree/comply.
It is your group, so you can decide however you want to handle this request.
Regards,
Murthy
On 6/21/09, Vikas Basantani <vikas.basantani@
> Hi Durgesh, if the stock goes to 30 on 17th July, the short call will kill
> you regardless of whether you are holding the superput position or the
> synthetic calendar...
>
> If assigned in a synthetic calendar position, the stock delivery at 22.5 can
> be done by buying the stock at market price (which means a loss of $750
> purely on the stock) or by exercising the long call (which may not be a very
> good idea as you will lose the time premium on the long call).
>
> If assigned in a superput position, sure you are already long the stock so
> you can use it to handle the assignment. But don't forget that you have just
> sold stock at 22.5 when it is trading at market price of 30 (which is again
> a loss of $750 purely on the stock). Further, you will now be left with a
> long put with a significantly lower value. Let's see the numbers again...
>
> Have a look at Diagram 4 which shows an approximate loss of $115 (assuming
> SID is at 30 on 17th July) for the synthetic calendar position.
>
> Compare this with Diagram 5 which shows an approximate loss of $110
> (assuming SID is at 30 on 17th July) for the superput position.
>
> Both are pretty close, right??? This is, again, a result of pure
> synthetics..
>
> The bottom line still remains the same - synthetically equivalent positions
> will have similar risk/reward characteristics in all circumstances.
>
> Cheers Vikas
>
> http://options101.
>
>
>
> In case of calendar, the delta of the short call will be pretty close to
> -100,
>
>
> On Sun, Jun 21, 2009 at 3:53 PM, Durgesh Mantri <drmantri@yahoo.
>
>>
>>
>> Vikas,
>> Your Put-Call Parity Analogy is Good. However , Consider this
>> Situation.
>>
>> If I am Long Dec'09 22.5 Call , and Short July'09 22.5 Call as you
>> mention.
>>
>> What happens if Stock goes to 30 on July 17 ( Expiraton Date ) .
>> I need to deliver the Stock and my Long Position of Dec'09 cant help me
>> much since it wont rise in value as much . But my Short Call will kill me.
>>
>> Durgesh
>>
>>
>> --- On *Sun, 6/21/09, Vikas Basantani <vikas.basantani@
>>
>>
>> From: Vikas Basantani <vikas.basantani@
>> Subject: Re: [TheOptionClub.
>> To: OptionClub@yahoogro
>> Date: Sunday, June 21, 2009, 12:30 AM
>>
>> Thanks Jeff for sharing the video and Bob for sharing your initial
>> experience with superputs...
>>
>> After listening to the video and reading Chris comments (some of them are
>> really good points), I just thought of providing some numbers/risk graphs
>> to
>> illustrate some important points for everyone's benefit:
>>
>> Let me start with the prices I picked up from the video:
>>
>> Long Stock SID @ 22.29 (100 shares)
>> Long Dec 09 22.5 Put @ 3.91 (1 contract)
>> Short Jul 09 22.5 Call @ 1.44 (1 contract)
>>
>> This superput position is plotted in Diagram 1 and shows a buying power
>> reduction of $1358.5.
>>
>> Now look at Diagram 2 which is nothing but a combination of Long Dec 09
>> 22.5 Call (synthetic equivalent of Long 100 Shares + Long 22.5 Put) and
>> Short Jul 09 22.5 Call - this is the synthetic call calendar as mentioned
>> in
>> Chris' post.
>>
>> Watch how close Diagrams 1 and 2 are to each other - similar risk, similar
>> reward, similar greek values etc - pretty close profit/loss if SID moves
>> 10%
>> up or down etc... There is no surprise here as the two positions are
>> synthetically equivalent to each other...
>>
>> One difference, though, is that the second position requires a buying
>> power
>> reduction of only $216 which is a much smaller number as compared to the
>> first position (due to the long stock).
>>
>> Another point to note is that maximum profit on the above two positions
>> occurs when SID is exactly at 22.5 at expiration. Both positions lose
>> money
>> if SID goes significantly away from 22.5 in either direction, thus
>> providing
>> evidence of the range-bound nature of these positions.
>>
>> Now compare these with Diagram 3 which is a simple covered call (Long 100
>> Shares + Short 22.5 Jul 09 Call) - as anyone can notice, the maximum
>> profit
>> still occurs at 22.5 but remains at that level if SID continues higher
>> after
>> 22.5, thus providing evidence of the bullish (actually neutral to bullish)
>> nature of covered call positions.
>>
>> And Bob, the superput position is not equivalent to a collar (but to a
>> calendar) simply because of the fact that the long put and short call are
>> expiring in different months (Dec 09 and Jul 09 respectively) .
>>
>> Just like superputs, other terms which are used for similar stuff are
>> Married Puts (long stock + long put) and Radioactive Profit Machine (used
>> by
>> Kurt Frankenberg at Radioactive Trading).
>>
>> *Bottom line*
>>
>> We, as traders, must understand options synthetics as they can help us in
>> clearly identifying "hidden" relationships between long/short stock, calls
>> and puts and that can help us in taking our trading to the next level.
>>
>> Hope it helps some on this group.
>>
>> Cheers Vikas
>>
>> http://options101. wordpress. com <http://options101.
>>
>>
>> On Sun, Jun 21, 2009 at 11:20 AM, Christopher Smith <chris@theoptionclu
>> .com <http://mc/compose?
>>
>>>
>>>
>>> Bob,
>>>
>>> Happy to help. Trading options is one area where a little knowledge can
>>> get you in a lot of trouble. On the other hand, if you take the time to
>>> really learn this stuff it can translate into a tremendous benefit.
>>>
>>> One thing that I will suggest is that you take advantage of this Options
>>> Mastery home study course give-away. It really is an excellent course
>>> and
>>> with Options University giving it away it is difficult to think of a
>>> reason
>>> not to register for a free copy of it.
>>>
>>> http://www.optionsm asterycourse.
>>> com/giveaway<http://www.optionsm
>>>
>>>
>>> Christopher Smith
>>> TheOptionClub. com
>>>
>>>
>>> --- In OptionClub@yahoogro
>>> ups.com<http://mc/compose?
>>> Bob C <bobc0923@..
>>> >
>>> > Hi Chris - Thank you very much for replying to my message and
>>> > correcting
>>> me in what I was attempting to do. Luckily the naked puts I had expired
>>> yesterday. But before I do any more I had better do some more homework
>>> and
>>> quick. I guess my inexperience is showing. - Bob
>>> >
>>> >
>>>
>>>
>>
>>
>
--
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