cheap MSFT synthetic 30 call for March
- Thread starter hajimow
- Start date
LOLMy guess is because the stock won't expire. But not a great use of capital. I could argue it's a lot better than buying stock and placing a stop loss on it.
However, assume you do stock and long put. At expiration in March is stock is up and you want to stay in hedged you will buy another put for APRIL to keep the protective put in place.
Really no different than buying call and if stock goes up you close MAR Call for profit before expiration and then buy April call. All and all, just buying the call ties up less capital and gives you some flexibility and one less transaction to worry about.
Unless you really want the dividend on a long-term holding or interested in voting that proxy, OP needs another unique reason why to choose the synthetic here as an outright position instead of legging in.
You didn't just ask that did you?
What I was trying to explain to you, and what coach sort of hinted at in more words, is that "the stock doesn't expire" is meaningless when you have an expiration looming with either overall position and your position afterward will be the same in either case. Y'know, because they're equivalent.
I think we are all pretty clear about the cost benifit of a long call compared to long stock. In your quote you may have given the numero uno reason he wants the stock and that's for a dividend....who knows.
Perhaps this kid just likes to trade stock and use options as a hedge. If these puts are cheap (not saying they are) I can't imagine they are with everything going on with the yahoo uncertainty this might be psycologically the best trade for him or her.
I read these threads sometimes and it seems like everyone jumps in to prove how smart they are, which usually confirms stupidity.
I think we asked appropriate questions to illustrate a point on why the synthetic is being chosen as an outright position versus simply buying the call.
Yes commie I think we both know this.....and I agree with you.
My guess is you are a former market maker, whose used to margin advantages and available capitol that must customers don't get. You have a different mindset. No it's not better than anyone elses. I say we give the synthetic long call guy a chance to explain why he chose that position, rather than flame him. I seemed like that's what some of the other comments were doing.