Thursday, October 22, 2009

[TheOptionClub.com] Re: Synthetics seem great

 

Well Hank,
In a word; "Slippage". Wider bid / ask prices on the call put combo than on the underlying. The only reason a market maker will take the other side of your order is if he or she can lock it in with the underlying for a little bit of edge )maybe a lot of edge depending on what you are trading). The other advantage to the MM is that he or she can lean on your order if they miss other heges and your order is still resting and perhpas a better price than the underlying after missing it.

In another; "Commissions". Combo (synthetic) may cost way more.

All the best,

Charles

--- In OptionClub@yahoogroups.com, "HankF" <hanksterr@...> wrote:
>
> Hi,
> Is anyone besides me doing synthetics longs and shorts for trades?
>
> I am having some great results and I am not really sure how to even figure my return except its enough. LOL
>
> I just dont see a downside to them if you were planning on buying long stock or shorting long stock.
>
> Why would you do that if you can duplicate or clone the same trade for a lot less money.
>
> Am I missing something?
>
> Thanks.
>
> Hank
>

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