Hello.
Say I am looking to buy one stock and short the other. For example. Purchase $10,000 worth of abc and short $10,000 work of xyz. Kind of like hedging with the exact same value. I would like to do this with a call and put. Since it is inevitable that the prices of the call and put to be quite different. How do I get close to a neutral position?
Do I buy as close to at the money as possible and the same amount of contracts of each?
Do I buy as close to the money as possible but the same dollar value of each? (if one of the options are half the cost I would by double the amount)
Value of options or value of the underlying?
I hope this makes sense.
Say I am looking to buy one stock and short the other. For example. Purchase $10,000 worth of abc and short $10,000 work of xyz. Kind of like hedging with the exact same value. I would like to do this with a call and put. Since it is inevitable that the prices of the call and put to be quite different. How do I get close to a neutral position?
Do I buy as close to at the money as possible and the same amount of contracts of each?
Do I buy as close to the money as possible but the same dollar value of each? (if one of the options are half the cost I would by double the amount)
Value of options or value of the underlying?
I hope this makes sense.