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Yep,you're right... that's the case. The ITM put has a higher delta and lower gamma so it creates an unbalanced risk graph (less option delta gained as the underlying drops versus a higher delta loss if the underlying rises). I doubt that this will make much sense but so far, what I'm...

Check your data entry (the strike of the short call)

Wellllll, the olympic judges get a bit picky if you don't label your routine properly :)

OOPS, my bad! Since I have your attention, here's another loony question (g). I'm gamma scalping stock against ATM long puts. Is there any advantage to using puts a strike ITM? They have a higher delta and less time premium so with those ITM, less TP would be paid out and decay would...

Sometimes it should be a mute point! :)

ROFL. I made a lot of money trading long before I had a clue what synthetics were. It's not exactly a vital metric for successful trading.

It's a graph of the position today. Net credit of $3.03 with a spread risk of 5 pts so maximum loss b/t 35 and 40 is $1.97 It's not quite risk free. :eek:

Thanks for posting the example. I think that you and JohnGreen covered the possibilities of position movement. As long as you receive a net credit you have a high probability of achieving a small gain. I wouldn't be highly fearful of the "outlier" risk of the stock gapping "Big Time" (i.e...

Divide your net premium by 2 Break even is 62 minus the above number For every pt IWM drops below breakeven, you lose 2 pts, down to 59 Below 59 you lose 1 pt per 1 pt drop A covered call equals a naked put so same result achieved by selling two 62 puts and buying one 59 put

Stop hitting on the locals...

I went to Walmart this morning. The salesperson said, "It's your lucky day. That item was reduced 25% today." I asked, "Can I have yesterday's price?" :)

OK, I'll bite. Who does it refer to? :confused:

Offhand, I don't see it but that means nothing. Can you post an example of a BWB that you are or have considered?

During the life of the near term long butterfly, the far short month butterfly will not attain anywhere near it's maximum loss at the central strike (premium retention) but will come close to its maximum gain with a violent move outside the wings. That means is that during the life of the...

Reg T defines "covered for margin" purchases for a call writer as being long the underlying stock or long a call with the same expiration or longer with the same exercise price or lower. For a put it's short the underlying stock or long a put with the same expiration or longer with the same...

I guess you're not a vegetarian... (fresh meat)

DMO - I'm shocked? Hardly. This is all getting a bit convoluted. First, my bad for using a 1.5% interest rate in a hypothetical example. The point of that was to present an example with a difference in cost. Obviously, if the interest rate is zero, there's no carry cost and ATM puts...

That's how I feel when someone posts their homework assignment :)

You can go to the FDA web site and sift through the myriad of pages. I used to do it but it was a tedious process.

I see. You have a cash flow problem :)