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I can't dispute anything that you say regarding what happens on a professional option traderr level since it's beyond my realm of experience. I'm a lowly retail trader :) But let me ask this. If the options are priced fairly, aka at theoretical levels, is there a difference in the P&L of a...

Well, that's a no brainer! Buy calls on up days and puts on down days :)

I'm actually curious as to whether the author got it wrong or whether Oddball had no clue about what he was reading :)

I give you a grade of A+ for OBFUSCATION and a grade of F for ACCURACY and RELEVANCE. Whatever you gain (or save) on the options due to interest rate change (rho) is offset by the change in carry cost on the underlying.

If the cost of carry is zero and it's a normal distribution, equidistant OTM strikes will have equal values. If the cost of carry is zero and it's a lognormal distribution, equidistant OTM strikes will NOT have equal values. Lognormal permits greater upside than downside. You've seen the...

If the assumption is that price is normally distributed then the options equidistant from strike should have the same value. I believe that Black Scholes assume a lognormal distribution so higher equidistant strikes are priced higher than the lower ones.

I don't agree. Wayne, who replied before you posted a good answer on another chain (paraphrased here): A put is a call and a call is a put - because adding (or subtracting) the underlying converts one to the other. I'm not sure what the correct technical terminology is to explain it...

Over writes are a good way to pick up some premium, to a point. Once the underlying gets somehwhat ITM, generally, it's not a good idea to try to defend the position, particularly once the delta of the short calls exceeds that of the underlying. Once that point is reached, I'd look seriously...

PS If you want to see the equivalence... For simplification, pretend that stock XYZ has no dividend and there's no borrow or carry cost. XYZ is 45. The Aug 45 put is $1 and the Aug 45 call is $1. Compare the potential return of the covered call to the naked puit at various prices. Set...

Uh huh... and it also gives you longer words to type.

You have waaaaay too much time on your hands :D

If the options aren't mispriced, the two strategies yield the same result (the dividend, if any, and carry cost are priced into the options. The advantage of the short put is potentially fewer transactions which saves you on slippage and commissions.

You do that just like you figure out the winner of the Kentucky Derby or the final score of the Steeler's game or this week's winning lottery numbers :) Really, if someone actually knew how to do that, do you think they'd share it? No, it means that FSLR spent some time around 170 and a lot...

I don't agree. If there's a price, there's an IV. If demand changes price, IV changes. If price doesn't change, IV doesn't change (ignoring the passage of time) but it still exists. If the quote is bogus then the IV is bogus.

I don't know what the politically correct word for this is so I'll go with apples and oranges. IV is a function of price. I'd have no issue with "The relationship between PRICE and an OPTION is exactly the same as the relationship between PRICE and a STOCK. A measure of demand." Even tho...

You pay taxers on capital gains. Plain and simple. What are you gains and losses in your example ???

1) Each stock has its own historical volatility so its options are priced accordingly.. hence they have different prices and different IVs. 2) The option's price tells you what volatility is being implied by that price. IOW, if you know all of the variables (stock and strike price, interest...

The more I think about this, the less feasible it seems to me. It's almost impossible to quantify the behavior of options on two different stocks. It's hard enough with one position on one stock. So maybe let's loosely extrapolate a pair possibility from how options on one stock might...

I dunno You got me by the banana brains. I have no clue :)

A fee per share broker would be better than a fee per transaction. At IB, other than a $1 minimum ticket, the equity fee is 50 cts per hundred shares versus 60 cts per option. The added benefit of a fee per share is that you can scale in and out at no commission penalty. A fee per transaction...