Recent content by Mugono

The existence of a dividend isn’t the defining feature that explains why put-call parity might not hold. P-C parity holds for European style options where the underlying pays a dividend. As others have explained / alluded it would not (theoretically) be in the interest of a holder of an...

This is hilarious :-)

I’m a (seeing this) little late . I note from above that the $90 strike had a 10 cent spread. It would’ve been good to see what the $85 strike call was trading for. Buying the 85/90 call spread could’ve been an option? [providing the resulting spread was narrower than $0.5 cents to...

Had the stock (continued to) tanked: 1. the purchaser of those 2 puts would've thanked their lucky stars :). 2. You would be relieved to only be the bag holder on 200 shares and not 1000. Consider yourself fortunate :).

You beat me to it :-)

"The long (call) strike provides an in-built hedge." The above was the answer to your question. The most you can lose is the premium paid purchasing the option. If you're long the stock, you're on risk all the way down to zero. It would be worthwhile reading a few option books / online...

Purchasing a synthetic (long) and a long put is cost ineffective. Replace the 3 legged position with one (a call option at the same strike / expiration as the long put) and save some commission. Sell an OTM call strike if you want to mitigate some of the time decay in the long premium. This...

Sure. The intent behind the derivative overlay that an airline, grocer etc may employ will typically be to hedge unwanted risk (e.g. to crude, currency etc movements); that is outside their core competency (managing their underlying business). Example: Airline - let's call it XYZ XYZ decides...

His comment is in the context of farmers, airlines etc. The derivatives are an overlay to their underlying business of selling produce or transporting people between countries. More generally @ironchef , I've read a number of your posts and saw somewhere that you've been trading full time for...

Lol. Thanks for your pity :-). It's been a busy week in the real world and responding on an internet forum hasn't been a priority. Nice debating with you.

You're quite a character Tommy. 1. I stand by the statement; theta is not a edge. This platform is (supposed to be) partly educational and to ignore the knowledge / experience of the audience is to deny reality. We have people here who are blowing out because of the leverage required to earn a...

Retailers - cover your risk and sleep better at night. It does wonders for the emotions and psychology :)

The whole point of trading / investing is to make money. Many on here sell OTM puts for pennies on stocks 'they like to own'. That's fine; and to each their own. But frankly, this board is frequented by retail investors who are selling for theta and not vega. Theta is not an edge. The moment...

Sure. I guess my point is the same rationale applies equally to putting on a credit spread. Was curious as to why you viewed that differently

Hi You mention that the purpose of selling naked puts is to purchase stock at a discount (in contrast to selling put spreads). I'd be grateful if you could help me understand how buying stock at a strike price above the (then) stock price is a discount...