Covered call vs. short put?

Quote from jwcapital:

Not true. Here is an example--Last year, January 2008, the ES plunged 60 points on MLK's birthday. That Friday, I placed 4 covered puts ATM. After the 60 point plunge, my underlying showed a profit of $12,000.00 and my puts showed a loss of $7,000.00 for a net gain of $5,000.00. Yes, the gain was less than the total premiums received, but there was no way I was waiting until expiration to try to make the extra gains. As things turned out, if I waited, I would have turned a nice gain into a loss. So, with due respect, the math held.
More...
Quote from nitro:
That is not quite correct. Skew is a factor anytime you are buying or selling synthetics vs the vanilla. In fact, to a professional options trader, they can be vastly different.
More...
These are OH SO WRONG on so many levels!

It boggles my mind that that there are people here that need to be convinced that put-call parity actually works, skew or no skew.

So I propose this. jwcapital and nitro, what say you that we put some money on the table? Let's do some trades, you and I, and we'll establish who's right experimentally.
 
Quote from Martinghoul:

These are OH SO WRONG on so many levels!

It boggles my mind that that there are people here that need to be convinced that put-call parity actually works, skew or no skew.

So I propose this. jwcapital and nitro, what say you that we put some money on the table? Let's do some trades, you and I, and we'll establish who's right experimentally.
More...
Make a market, and then I will take it or not take it. Making a side bet is fine with me.
 
Quote from atticus:

Synthetics vs. the vanilla? Huh?
More...
E.g.,

Log underlying = vanilla.
Long Call, short Put at same strike = synthetic equivalent of above.

I am not sure what you don't understand.
 
Quote from nitro:

E.g.,

Log underlying = vanilla.
Long Call, short Put at same strike = synthetic equivalent of above.

I am not sure what you don't understand.
More...

They're both vanillas. One is synthetic, one is natural.
 
Quote from spindr0:

...

But let me ask this. If the options are priced fairly, aka at theoretical levels, is there a difference in the P&L of a natural versus its synthetic??
More...
Yes. It is very possible that the synthetic equivalent can outperform the natural version.

This happened in the SPX index options pit when we were at 775 ish or so when the market was in free fall. The synthetic puts were way better trade than the outright put. In fact, I am talking empirically, not theoretically.
 
Quote from nitro:

Make a market, and then I will take it or not take it. Making a side bet is fine with me.
More...
Cool, sounds good...

I would assume you prefer stocks or indices as underlying? If so, tell me what underlying you like (I am not an equities person) and we can proceed.
 
Quote from Martinghoul:

Cool, sounds good...

I would assume you prefer stocks or indices as underlying? If so, tell me what underlying you like (I am not an equities person) and we can proceed.
More...
ES or SPX options. For example, make me a market on any short dated ATM or OTM natural calls tied to ES, and I will almost certainly take the bet.
 
Quote from nitro:

Yes. It is very possible that the synthetic equivalent can outperform the vanilla version.

This happened in the SPX index options pit when we were at 775 ish or so when the market was in free fall. The synthetic puts were way better trade than the outright put.
More...

You're arguing microstructure, which is absurd. It's more likely the natural will outperform the synthetic due to microstructure, unless you're a local.
 
Quote from nitro:

ES or SPX options. For example, make me a market on any short dated ATM or OTM natural calls tied to ES, and I will almost certainly take the bet.
More...


So you're crossing an exchange trade outside the market? Sure, that's legal.
 
You must log in or register to reply here.
Back
Top