How much do you have to know?
- Thread starter gritsking
- Start date
Quote from The Big D:
Why would I want to be likable? I'm making fun of options weenies who can't read, which is highly entertaining Likable has nothing to do with it.
And making yourself look like a fool in the process. But if that is your intent, then I don't really see a point here. You're just being obtuse, because it gives you some sort of thrill. Seems strange to me, but whatever floats your boat.
It's really not that hard. When your synthetic stock reaches expiration (and it will, some of the time) you're left with real stock. If you want to continue with synthetic stock, you'll have to sell the real stock. Or I suppose you could sell just before expiration, and eat yet another gap.
Or you could just take the hint your options are trying very hard to give you, and own the underlying
There are inherent disadvantages to the conventional CC to the active trader. But your slippage points are valid.
Quote from spindr0:
Hmmm, I think I'm going to fail the "likeability test".
:eek:
Oops... come back when you're ready then.
I'm intrigued by people like you. Did typing that comment make you feel powerful or superior in some way?
Seriously, what the hell am I supposed to do? I already gave a very concrete example trade to duplicate, and that trade held the underlying by itself for a good portion of the trade. So there's only three posibilities:
1) You are discussing the subject as if you know something about it without actually having read the previous posts, more or less making you an ass.
2) You read the previous posts, but the concept of buying a stock without an options transaction was so foreign that you missed what was going on. Rather absurd.
or
3) YOu knew exactly what I was talking about, but pretended you didn't, more or less making you an ass.
Which is it?
Quote from The Big D:
It's really not that hard. When your synthetic stock reaches expiration (and it will, some of the time) you're left with real stock. If you want to continue with synthetic stock, you'll have to sell the real stock. Or I suppose you could sell just before expiration, and eat yet another gap.
Or you could just take the hint your options are trying very hard to give you, and own the underlying
You completely missed the point of the post.. You said:
"In order to create a similar position with options, you have to do a lot more than just sell a put. You first have to create synthetic stock when the strategy would just hold stock. "
This is an incorrect statement. You don't have to create the synthetic first. The synthetic stock AND the short call are all contained in the simple selling of one put.
"Then you have to SELL that synthetic stock and replace it with a short put."
Again, an incorrect statement based on the fact that the first statement was incorrect. So neither of the first two transactions were necessary. Which tells everyone here that you really don't understand things as well as you think you do.
"If that short put expires ITM (which would happen roughly 1/2 the time in an efficient market), you then have to sell the resulting underlying"
This is a correct statement
"replace it with more synthetic stock, and sell THAT the next time you want to buy your short put. "
This again is incorrect for the same reasons as above.
IOW, you are thinking that replicating the CC strat requires 3x as many transactions, when in reality it only requires additional selling of the assigned underlying roughly 1/2 the time. So we are simply talking about an extra $5 commission maybe six times a year. This amount is overwhelmed by the fixed income amount you can make on your excess capital if you instead choose naked puts.
Or #4)
Mistakenly missed the part of your post where you so thoroughly explained your example, and subsequently asked a question for clarity. Immediately afterward getting berated for trying to help, making you the jerk in the situation.
That is why you're intriguing to me. Your immediate assumption is that a complete stranger has some twisted incentive to act that way, with no prior history.
I tend to assume that people are incentive based. If someone is coming off as a jerk, my first assumption is rarely that he is simply trying be a jerk with no other motivation.