Buying/Selling Options

Quote from MTE:
You can find more info in any decent options book as synthetics are based on the basic option pricing relationships like put-call parity (long stock+long put=long call or short stock+long call=long put) and the box spread (long call vertical is equal to the short put vertical at the same pair of strikes and vice versa). In other words, any imaginable option position has a synthetic equivalent.
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For me the easiest way to remember is the formula s=c-p.

I have a question for exQQQQseme. You came here from the Optionetics forum, and I welcome you here. But did you actually follow any training from Optionetics? The stuff you seem to have questions about is so basic, I can't imagine they didn't teach it there.

Ursa..
 
MajorUrsa, while it is true that I became aware of these Forums as a result of the now famous exchange on the Optionetics Board between Mav and some of the Optionetics people, I don't regard myself as coming from Optionetics or anywhere else. As I've previously stated, I am an independent person, an independent thinker, and value that independence.

I don't know anything about you or your background or your knowledge of any subject. If you feel compelled to interpret my questions as demonstrating a lack of basic knowledge, that's your prerogative.

If you, or anyone else, are of the opinion that your postings will somehow provoke me into an argument regarding the merits of Optionetics or any other organization, I assure you, IT WILL NOT HAPPEN. I am here to (a) enjoy discussing the subject trading stocks and options, which I am fascinated with, (b) increase my knowledge of the subject by asking questions and interrelating with you and others, and (c) impart my knowledge where I am in a position to help others.

As far as disagreements, let me share with everyone something I hope you will find interesting. You might be aware of the fact that famed Chicago economist, Milton Friedman recently passed away. We all know of Fisher Black, who along with Myron Scholes, came up with what is now the famed Black Scholes formula. Fisher Black, who was born in 1938 and unfortunately died in 1995 at the young age of 57, had numerous recorded exchanges with Milton Friedman. These two brilliant men, while they had tremendous mutual respect for eachother, were unable to agree on practically anything.

Hopefully, we are all capable of following their example when it comes to the opinions of others. (By the way, because Dr. Black died before the award was granted, he was not eligible to officially receive the 1997 Nobel Prize for Economics with Dr. Scholes.)
 
Quote from bob1006920:

MajorUrsa, while it is true that I became aware of these Forums as a result of the now famous exchange on the Optionetics Board between Mav and some of the Optionetics people, I don't regard myself as coming from Optionetics or anywhere else. As I've previously stated, I am an independent person, an independent thinker, and value that independence.

I don't know anything about you or your background or your knowledge of any subject. If you feel compelled to interpret my questions as demonstrating a lack of basic knowledge, that's your prerogative.

If you, or anyone else, are of the opinion that your postings will somehow provoke me into an argument regarding the merits of Optionetics or any other organization, I assure you, IT WILL NOT HAPPEN. I am here to (a) enjoy discussing the subject trading stocks and options, which I am fascinated with, (b) increase my knowledge of the subject by asking questions and interrelating with you and others, and (c) impart my knowledge where I am in a position to help others.

As far as disagreements, let me share with everyone something I hope you will find interesting. You might be aware of the fact that famed Chicago economist, Milton Friedman recently passed away. We all know of Fisher Black, who along with Myron Scholes, came up with what is now the famed Black Scholes formula. Fisher Black, who was born in 1938 and unfortunately died in 1995 at the young age of 57, had numerous recorded exchanges with Milton Friedman. These two brilliant men, while they had tremendous mutual respect for eachother, were unable to agree on practically anything.

Hopefully, we are all capable of following their example when it comes to the opinions of others. (By the way, because Dr. Black died before the award was granted, he was not eligible to officially receive the 1997 Nobel Prize for Economics with Dr. Scholes.)
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I like your reference to these two man, and I hope the same hopes. It was not at all my intention to start a discussion about O. or to offend you in any way. My message is to be read exactly as i wrote it, but I assumed you were really a pupil from the O.-classrooms.

My background in options is very mediocre, but I suggest, before you go any further, that you read and mostly understand Natenberg, and read and try to understand Cottle. The latter is very important to understand the relation between options and synthetics. It is really the basics for someone seriously interested in options, and before reading those there will always be a cloud of mysteries around the subject.

When discussing questions here it is mostly assumed you have this basic knowledge. Lack thereof is mostly immediately apparent, but sometimes we make assumptions that lead to misunderstandings later on.

Ursa..
 
Quote from MajorUrsa:

My background in options is very mediocre, but I suggest, before you go any further, that you read and mostly understand Natenberg, and read and try to understand Cottle. The latter is very important to understand the relation between options and synthetics. It is really the basics for someone seriously interested in options, and before reading those there will always be a cloud of mysteries around the subject.
Ursa..
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MajorUrsa,

I agree with you on Natenberg. I haven't spent a lot of time in studying synthetics (but I knew the basics), as I am convinced that there is no arb opportunity for any retail traders.

I have a temptation to buy Cottle's book but it is too expensive. I wonder how useful it is for actual trading. To me managing your option positions is a lot more important than understanding synthetics.
 
Quote from yip1997:

MajorUrsa,

I agree with you on Natenberg. I haven't spent a lot of time in studying synthetics (but I knew the basics), as I am convinced that there is no arb opportunity for any retail traders.

I have a temptation to buy Cottle's book but it is too expensive. I wonder how useful it is for actual trading. To me managing your option positions is a lot more important than understanding synthetics.
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The book is not about 'arb opportunity' and only costs around US$91. I assume you're an active trader, if so then $91 should be a fairly small sum compared to the amount you've lost on various option plays (unless you have a 100% success rate, lol). My opinion is that it is worthwhile purchasing if you trade options with real money.
If you don't have any money and only study options for fun or as a hobby to pass the time and don't intend to trade with real money, then I wouldn't recommend its purchase (or any other educational expense).
Of course, if you already understand synthetics and position dissection then perhaps there's no need to purchase his book, but it still makes for a good read.
Best
daddy's boy
 
e-mail Cottle and tell him (Coach Phil) that I highly recommend the book to purchase (which I really do) and see if he has any discount or special. Never hurts to ask and tell him I said hi :)
 
Be careful. When I mentioned Coach, he said "That god#$#@ sonofa@&^#!!!" "I'm going to charge you DOUBLE!" "Don't EVER mention that ^%$#@er AGAIN!!!"

I think it was something about a daughter, a wife and a dog...

j/k :D
 
oh yeah I forgot about that night... I was a little drunk... :eek:

lol

Quote from Wayne Gibbous:

Be careful. When I mentioned coach, he said "That god#$#@ sonofa@&^#!!!" "I'm going to charge you DOUBLE!" "Don't EVER mention that ^%$#@er AGAIN!!!"

I think it was something about a daughter, a wife and a dog...

j/k :D
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Quote from daddy'sboy:

The book is not about 'arb opportunity' and only costs around US$91. I assume you're an active trader, if so then $91 should be a fairly small sum compared to the amount you've lost on various option plays (unless you have a 100% success rate, lol). My opinion is that it is worthwhile purchasing if you trade options with real money.
If you don't have any money and only study options for fun or as a hobby to pass the time and don't intend to trade with real money, then I wouldn't recommend its purchase (or any other educational expense).
Of course, if you already understand synthetics and position dissection then perhaps there's no need to purchase his book, but it still makes for a good read.
Best
daddy's boy
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or if you are cheap like me, you can purchase his electronic version with just $40 or so. I printed it out and store in a 3 hole binder.
 
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