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That makes sense. Thanks MMTS. Cheers

The conclusion I have to draw from this revelation is that there is no advantage trading collars over trading the equivalent bull call spread. I was under the impression that the collar was slightly different from the BCS in that the stock in a collar isn't affected by volatility or time decay...

Don't worry, I noticed :) Cheers daddy's boy

Thanks guys - you're tops! This thing was driving me nuts! I must say ET is fantastic, thanks to guys like yourselves. Best daddy's boy

Fellow traders, I have come across a dilemma and am hoping for some fine advice. Here is the dilemma. Everyone agrees that a collar has the synthetic equivalent of a bull call spread. However, if I want to roll up the put in my collar I simply sell my current long put and buy the next higher...

It's an example of attention seeking behaviour, usually restricted to small children and teenagers. daddy's boy

Umm, I hope you all realise that a lot of my posts are kind of tongue in cheek, the bits about crying and hugging, that sort of stuff. Right? I mean, I'm not really a daddy's boy, it's just a handle because I have a t-shirt with "daddy's boy" on it (it's from a gay designer but I didn't know...

You are very welcome. It's good to see that you now understand options. Unfortunately I'm still struggling a bit with the finer nuances, but I guess the basics are quick to learn, i.e. what is a put/call etc.. Best daddy's boy

I'm almost embarrassed to admit it, but I first came across options at an Anthony Robbins "wealth mastery" seminar many moons ago. Initially put them on the backburner because it was "too difficult". Next I came across a basic and then an advanced options course given by our Sydney Futures...

Thanks MTE. Is it easy to calculate the cost of carry, if so, how is it done? daddy's boy

??? Surely you can leg out of a debit spread also if the underlying moves against you. There really is no difference from the risk reward point of view of debit vs equivalent credit vertical, as MTE has already pointed out. daddy's boy

Well, it was greeks day a while back and now it 's time for a change :) Thanks for your replies. Best daddy's boy

I think I just worked it out whilst having my shower. To get max risk I subtract the long put strike from the synthetic long stock strike and add the option premium (if a debit) or subtract the option premium (if a credit)? daddy's boy

MoMoney This may sound idiotic but how do you work out the max risk on the synthetic bull vertical? I can see how you arrive at the max profit by subtracting the strikes from eachother and ignoring the synthetic long stock component. But if you collect a credit on opening of the trade? For...

If underlying expires at 219 or less, you get to keep your $1 premium - it's your maximum profit, as you said yourself earlier in your own post ("For call option writer (sell call) premium is all the profit you can take"). Please take the advice from the other posters - they're good folk...

Hi MTE Sounds a bit complex to calculate. Why not just work out the short call's extrinsic value and if it's equal to or less than the dividend, early exercise is virtually guaranteed? The maths seems a little easier than "corresponding put, cost of carry ..."? No? Best daddy's boy

You've constructed a synthetic stock position which doesn't make sense. If your long call is 1.10 and your short put is 2.60 then you have a net credit of 1.50, giving you a synthetic stock price of 67.50-1.50=66. But your real stock is trading for 64.73. How come? If you can answer that then...

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In summary, the risk of assignment is high when there is very little, or no, extrinsic value in your short leg. daddy's boy

Hi Chris If you buy a regular condor, as in your second example, you want the price of the underlying (u) to be inside your short strikes at expiry for max profit. If you sell a condor, as in your first example, you want the price to be outside your short strikes at expiry for max profit. The...