"Bullets"

[nitro]

Originally posted by GATrader
I looked at my option matrix of Ge and what I could see doing is buying the long stock, long the 45 put in Dec at 12.8 and instead of immediately selling the 45c at 25 cents, just leave that unlegged hoping that if GE goes up before Dec, I might be able to sell the 45 call at a greater price. All it is is I am taking the chance of legging the short call later on. It has happened to me on several occasions wherein the stock was in mid 50's had a bad couple of weeks, I put on the synthetic call and stocks rebounded from low 30s to mid 40's. I get the ff. benefit
1. "bullet"s via the married put.
2 cheaper overall cost since I put the married put only once intead of paying the LLC 2 cents per share per day when I put it on.
3. possibility of homerun IF stocks rebound.
Hope this clarifies things.

OK, I think I get it:

1) IIF, you are gonna trade the stock, and
2) you want to be able to short it, and
3) you were gonna probably buy the bullet EVERY day from now until expiration [actually, you would do the conversion in this case.]

THEN and ONLY THEN, would you do what you are saying.

I guess I never thought about this, but you are correct - you are better off putting on a married put on "by hand" if the firm allows it [you cannot use the "one day bullet" version that these guys at prop firms are talking about,] and ASSUMING the margin requirements (buying power) is diminished ever so slightly if at all.

This is as opposed to buying the conversion at once - but by doing it your way, you have also left the possibility of having the stock rise and be able to sell the call before expiration to give you a locked profit in the conversion?

nifty.

nitro

PS - of course, I just realized this is not risk free, as if the stock goes down, the premium you could have gotten by selling the DOM call will diminish - true, it is so little anyway...

 

[inandlong]

I was told last week that Cybertrader is going to offer bullets in September. I think they are the first DAT to do so, excluding Tradestation which offers them to institutions.

The reason that I have contacted a pro firm is to have access to bullets. It is frustrating to be right and out because the price traded away without an uptik.

And remember...

 

[nitro]

Originally posted by inandlong
I was told last week that Cybertrader is going to offer bullets in September. I think they are the first DAT to do so, excluding Tradestation which offers them to institutions.

The reason that I have contacted a pro firm is to have access to bullets. It is frustrating to be right and out because the price traded away without an uptik.

And remember...

inand,

Hmmm ... Is this the bullet version that requires two accounts - or is it like the ones at prop, that is, all it is really costing you is the comission and non of this "jumping through hoops" to get one?

nitro

 

[inandlong]

That is a good question nitro. I will call in the morning and find out more details.

 

[thetraderprofit]

Gaz,

I know this is a late comment, but....
FYI I have spoken at length with a securities lawyer with a major securities law firm about the use of bullets. Many of their lawyers used to work at SEC.

SEC is well aware of bullets. They are understood and accepted.


The attorney said, "they are a fiction." "Bullets are an economic toll booth."

 

[qazmax]

Originally posted by GATrader
I looked at my option matrix of Ge and what I could see doing is buying the long stock, long the 45 put in Dec at 12.8 and instead of immediately selling the 45c at 25 cents, just leave that unlegged hoping that if GE goes up before Dec, I might be able to sell the 45 call at a greater price.

Might be easier to just go buy the call...

 

[qazmax]

Originally posted by thetraderprofit
Gaz,

I know this is a late comment, but....
FYI I have spoken at length with a securities lawyer with a major securities law firm about the use of bullets. Many of their lawyers used to work at SEC.

SEC is well aware of bullets. They are understood and accepted.

The attorney said, "they are a fiction." "Bullets are an economic toll booth."

Any idea why retail firms do not offer them? Is it economics or regulatory?

 

[qazmax]

Originally posted by rtharp


A great example of this is the week after Sept 11th Bullet firms closed the doors for the week

Robert

This is assuming that the bullet is just an offsetting ITM put... it is suposed to be a short call and long put.

I bet the only reason bulet companies were closed after Sep 11. is for book work, and sysem updating (counting all the commish they make selling fake positions).

If the bullets have a one day expiration then it does not matter what happened after the close on Sept 10.

 

[stock777]

Very interesting about Cyber offering bullets. I was wondering when some retail firm would get into that act. I've about had it with the pompous 'its only for props' line.

I may actually have to give Cyber some commission biz, instead of only using them for my charting and quotes.

 

[Good_Attitude]

There currently is a retail firm that offers "bullets." I will not pretend however that I am a happy customer that happened to stumble across them. I do have a business relationship with them and don't want to piss anyone off that feels that I am trying to further my own success. Which I am of course. If the thread votes to reveal the name of the firm I will be pleased to post the URL of the firm.