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My point was that both the long and short synthetics were within a few cents of the theoretical value once the bid/ask spread is taken into account. If that is true day to day, as I find it usually is for liquid option chains, the value of the synthetic will indeed track the stock price, modulo...

You don't say what the underlying is or what the bid/ask spread is. For liquid option chains and near the money strikes I rarely see violations of put-call parity more than a few cents above the bid/ask spread. Example: HPQ at 42.14. $40 Jan call bid/ask of 2.97 / 3.00. $40 Jan put...

Well, if he hasn't made a trade in 2 years that claim would be true.

During that last flash crash there wasn't much you could do. The option market makers hunkered down in their bomb shelters and bid/ask spreads got wider than the Grand Canyon. I had a bull put credit spread on at the time, and for a few minutes it was fully in the money. After the markets...

I'm happy to hear that the Pope has volunteered to do neurosurgery for free.

I am all in favor of a law taxing the income of Warren Buffet, George Soros, and every other billionaire in favor of Obama at 90%. Leave the rest of us out of it.

If the call is covered its sale shouldn't require any margin at all. Are you sure you understand your broker's margin requirements?

Yes, any strike will do. This is just put-call parity. If a put goes ITM it is up to the put owner to decide if he wants to exercise it. Unless the put is very deep ITM or near the expiration date it probably won't be exercised because the put owner would be throwing away the time value if he...

Any strike will do, so long as the call and put have the same strike price. Assuming that margin is about 20% of the strike price of the put, your total upfront cost is lower if you chose a higher strike price, but that increases the odds that the short put will be assigned. When I've done...

I can't parse your first two sentences. Whether a synthetic long is superior to buying two calls depends on what your goal is. If you want a pure leveraged, delta 1, theta = vega = gamma = 0 directional play a synthetic long does the trick. But it works both ways -- if the underlying drops 5...

For people buying 20 coins at a time those are indeed better prices.

You can create something very close to a long futures position, with a delta of 1, no time value, and a margin requirement, by creating a synthetic long -- buy a call and sell a put at the same strike price. If you do this on a stock where the options have a narrow bid/ask spread you will find...

Answer to your first question -- yes, you should be suspect, that is why you should never trust your broker to make investment decisions. People selling their gold are also doing so to make money or cut their losses, or to cash in their assets. I don't know why anybody would buy gold from...

That is correct. For option trading I stick to assets that have highly liquid option chains with low bid/ask spreads. Whatever edge you might have in your trading strategy must overcome that bid/ask spread before it has a chance of doing better than break even.

I get depressed thinking about <i>any</i> of the likely candidates for 2012. Perhaps I can take comfort in the thought that by then the Pleidians or whatever will have landed and become our new overlords.

Strangely the same people who ask that question usually never ask it about the stocks they are buying, with the result that dumping money into an IRA, even during 1999 or 2007, is regarded as normal but dumping some money into gold is regarded as a fringe activity. Chris Weber has reported...

Here in the U.S. one generally has to buy retail quantities of coins from jewelers or rare coin dealers. Of course standard bullion coins are not "rare", and everybody knows it, they are sold at a small premium over spot. It's just that the market is handled by the same guys who sell...

If you are buying gold in retail quantities you would generally be buying bullion coins from a coin dealer. The same dealer will buy it back. There's about a 3% bid/ask spread on 1 oz coins. See, for example http://www.golddealer.com/bullionpage.html Typically the bid is at or slightly...

One man's freedom fighter is another man's terrorist. When we were helping out the contras were we state sponsors of terrorism? OK, how about when we were supporting Osama and his buddies in their war against the Russians? And guess what, we *are* already a nuclear power.

Here is McCain during his 2008 campaign: http://www.youtube.com/watch?v=o-zoPgv_nYg Here's Sarah Palin: http://www.youtube.com/watch?v=1FE2YC032BI