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fubar:p

Generally, every vertical debit spread has an equivalent vertical credit spread. There are some exceptions where the equivalency may get skewed a bit, such as in hard to borrow stocks. The credit spread for the example would be long QQQQ 50P short QQQQ 55P OP, vertical debit and credit...

Think about thinking about the risk. Yeah, if you've got a few million to play with - no biggie. But if you've barely got the margin - well - to carry this trade over a few days would be hell.

:D Yeah, no kidding - I'm glad that I'm not part of this stupid thread......oh, crap.

For every contract, there are two sides - long and short - as you put it. When they cover, the shorts buy contracts. If they aren't buying from the longs, then there are still the same number of short contracts - sold when the original shorts covered. So, the seller(s) to the original...

What MAW is saying is that since you can exercise and get parity now, there is no real value to the pos. theta. But that's very theoretical because there really is no pos. theta, just a miscalculation by the analytics. There's no advantages to your situation. The greeks are meaningless -...

The theoretical values for the 48+ strikes are below parity, hence the pos. theta. These values are too low. Since they are American style, the value used should be parity and possibly a little higher for the 48 strike. This would give the 50 strike a value of 6.01. The difference...

It would be helpful to know the theta value, and the option and the underlying quotes at the time. It was probably just a distortion of the option pricing by the analytics. The ITM puts (46-54) should not be priced below parity for practical purposes. The analytics seems to have done just...

For European style options ITM puts can trade for less than parity - due to cost of carry. So if your put is euro - the positive theta may represent the difference between the discount and parity.

And was that a put BWB?

I don't know about you, but those pesky position limits are really a restraint to my trading.:p

Yes, a good idea.

Perhaps it was because you were short those shares, not long.

:confused: :eek: :D

You don't know about "BANG" Option Trading? It's pretty simple really. Step 1 - Buy options Step 2 - "BANG" collect profits.

In essence, 50 shares/put creates a neutral postion 1/2 the size of the call/put combo.

Perhaps you were comparing long 100s + 2 long puts vs. 2 calls + 2 puts both neutral. The 2 calls + 2 puts is twice the size of the synthetic straddle. Should be 100s + 2 long puts vs. 1 call + 1 put to see the equivalency. So all other factors being equal, with equivalent...

Hi Spin, Of course, your example assumes much higher interest rates than today's rates. The extra .12 comes from interest paid on short sale proceeds. We both know that the ave. retail doesn't earn i on short proceeds and for now we pay - but the option pricing assumes that we are all...

No, there's little chance of "free money" in your example. Don't forget that you pay the div. if you are -u; and the div. is factored out of price of u. 1) If you +u covering all calls there's a small chance that some or all may not be exercised. The likely outcome is a 0 position. And...

Making a nickel credit on one trade is not very impressive. Indeed, you'd better be profitable nearly every time you try this. Your spread may still be profitable. Even OP's initial spread has a chance, it's not over yet. So, how would you have handled today? Would you have stayed out...