Covered call vs. short put?

Quote from atticus:

We can't trade the box and make the bet, so how do you propose marking the synthetic to spot?

ES or SPY.
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The spot for SPX is ES, at least I don't know anyone that drives SPX options with anything else. But let's just make it ES then. I have to think if American vs European would affect anything, but I doubt it.
 
I will sell you the Sep 915 ES put at mid tied to ES, and I will go long the synthetic equivalent put also at mid, on Monday at open.
 
Quote from nitro:

The spot for SPX is ES, at least I don't know anyone that drives SPX options with anything else. But let's just make it ES then. I have to think if American vs European would affect anything, but I doubt it.
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lol, it's hardly perfect. Yeah, fine, ES it is. I will screen capture the ES atm call and put market on Monday at 10am ET along with Sep ES futures.
 
Quote from atticus:

lol, it's hardly perfect. Yeah, fine, ES it is. I will screen capture the ES atm call and put market on Monday at 10am ET along with Sep ES futures.
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What is this? Doth my eyes deceive me?

This was my idea!!! :)
 
10:12am ET

Long natural call, mid: 17.00
Long synth call (spot and put, mid): 17.125
Long synth call (spot offer, put mid): 17.25

Long natural call, taker: 17.25
Long synth call, taker: 17.50
 

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Quote from atticus:

This is proof of nothing. What does waiting have to do with P-C parity? Price an ES Aug 1010 covered call against a simultaneous ES Aug 1010 naked put. Paper-trade the position and you will see the equivalence, empirically.
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A little off topic but here is an interesting paper on put/call parity. I had a feeling that this predated Hans Stoll's famous paper. It is apparently also used to help some of the Muslim community obtain mortgages as they are not allowed to "pay interest". Some of you may find this light reading.

http://lsr.nellco.org/upenn_wps/49/
 
Quote from kinggyppo:

A little off topic but here is an interesting paper on put/call parity. I had a feeling that this predated Hans Stoll's famous paper. It is apparently also used to help some of the Muslim community obtain mortgages as they are not allowed to "pay interest". Some of you may find this light reading.

http://lsr.nellco.org/upenn_wps/49/
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This is very nice, thx a lot!
 
Both.

When I am interested in paying for a stock but only at a specific price and don't mind collecting some premium while I wait.

When I am long a stock and I want to sell at a specific price but don't mind collecting some premium while I wait.
 
Quote from wayneL:

It's interesting psychological study this CC vs NP argument.

The equivalence is proven over and over and over again on the Internets, yet people seem to go great lengths and massive stretches of logic to try and prove why CCs are better than naked puts.

Why?

What is so psychologically comforting about covered calls, and what is so scary about naked puts?

It can't be the leverage argument, because you can be just as blinkin' silly with CCs as you can with short puts under risk margining.

On one level I get it... lack of knowledge etc. But once explained, short puts are still regarded as the spawn of Satan, even by some knowledgeable gurus.

</perplexed>
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Maybe the only advantage it's psychological:

If you own a covered call, and the stock/ETF goes down, then you say:
Nah, it doesn't matter I'm owning this stock for the long run. Meanwhile I kept 100% of the option premium.

If you shorted a put, and it goes down, you take a "full loss", and profits are not easily seen.
 
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