How to trade volatility?

[ChimpTrader]

No, it's not right.

Long 1 call = long 100 shares + long 1 put.

I know it's not right. You cannot say both the things are same since their pay-off diagram matches.

When you say Long 1 call it means Long 1 naked call. There is no cash position. It's a naked position, plain and simple.

Now it's a totally different thing when you say I am long 100 shares (bullish on the underlying) and to protect my position, depending on the situation, I can either go for a Covered Call (less volatile situations) or a Protective Put (if high volatility is expected). So, fundamentally here I am owning the underlying and using options to mitigate risk. It's a different thing.

In the first case I am leveraging using options instead of going long on the underlying directly. In the second case I am protecting my position from the uncertainties of the market.

Hugh Jackman and Robert Downey Jr. are look alike, so you can't say they are same...Come on... Here are the pictures for you https://cheezburger.com/2612622336

Don't pluralize anyway.

Who? me? or you?

 

[destriero]

I know it's not right. You cannot say both the things are same since their pay-off diagram matches.

When you say Long 1 call it means Long 1 naked call. There is no cash position. It's a naked position, plain and simple.

Now it's a totally different thing when you say I am long 100 shares (bullish on the underlying) and to protect my position, depending on the situation, I can either go for a Covered Call (less volatile situations) or a Protective Put (if high volatility is expected). So, fundamentally here I am owning the underlying and using options to mitigate risk. It's a different thing.

In the first case I am leveraging using options instead of going long on the underlying directly. In the second case I am protecting my position from the uncertainties of the market.

Hugh Jackman and Robert Downey Jr. are look alike, so you can't say they are same...Come on... Here are the pictures for you https://cheezburger.com/2612622336


Who? me? or you?

Idiot. Long 100 shares is not equivalent to a long call option unless the call option has a strike price of zero and it's perpetual.

 

[ChimpTrader]

Idiot. Long 100 shares is not equivalent to a long call option unless the call option has a strike price of zero and it's perpetual.

Yup....I am an idiot, then you are an Idiot to the power Infinity.

Long 100 shares is not equivalent to a long call option unless the call option has a strike price of zero and it's perpetual.

Yeah! Ohhh Wow! Nobody knew that Einstein! Don't share your secrets mate, others are too illiterate to fancy your words. But somehow you did not mention that when you wrote:

And FWIW, anyone that knows the answer to the following can request via PM my TDA IRA PNL to date:

What position is equivalent to long 100 shares and long one put?

a) a toaster

b) long call

c) Brett Kavanaugh

d) Herpes

9) all of the above

You simply compared an Option to a Share without showing the assumptions. Now you are showing off, since you got a sting of your own shit, yeah!

You are a funny dude, man! You don't realize that you have to hold shit before throwing it at someone else. Carry on.......I am enjoying your BS.....

 

[destriero]

Yup....I am an idiot, then you are an Idiot to the power Infinity.

Yeah! Ohhh Wow! Nobody knew that Einstein! Don't share your secrets mate, others are too illiterate to fancy your words. But somehow you did not mention that when you wrote:

You simply compared an Option to a Share without showing the assumptions. Now you are showing off, since you got a sting of your own shit, yeah!

You are a funny dude, man! You don't realize that you have to hold shit before throwing it at someone else. Carry on.......I am enjoying your BS.....

This was my question: What position is equivalent to long 100 shares and long one put?

I did not ask to define shares as a synthetic perpetual call. There are no listed perpetual options with a strike price of zero. lol.

The answer is long call. Long 100 shares and long one put = a (listed) long call. Your assumption was that long 100 shares = long call.

I can fix a lot of things but I can't fix stupid.

 

[ChimpTrader]

This was my question: What position is equivalent to long 100 shares and long one put?

Right answer is none.... No! not even a long naked call, you cannot say that just because their pay-off diagram matches. Going naked call is like going naked in front of an upcoming storm, yeah, you might live it out but more likely to be blown out. And going Covered Call or Protective Put is like sitting out the storm from inside a truck, very well, you still might get blown out but, more likely often royally you get to live it out. That's the difference! So, your question in the first place was idiotic, nonsensical, nay, stupefied!

I did not ask to define shares as a synthetic perpetual call.

But that's exactly what you did!

There are no listed perpetual options with a strike price of zero. lol.

Another gem popping out of your shitty fingers. There is no listed perpetual options with a strike price of zero, you moron, but, I hope you are aware of a strike that is called ATM (AT-THE-MONEY), where the difference between the Spot and the Strike is the least out of all the available Strikes, almost zero, yeah! So, a Call option at this ATM strike will be directly correlated to its underlying and a Put option at this ATM strike will be inversely correlated to the underlying. But I think you have a different opinion. According to you the theoretical statement which reads and I quote:

100 shares is equivalent to trading 1 options contract

is incorrect, right?

I can fix a lot of things but I can't fix stupid.

You fix yourself first mate.....Control your testosterone driven attitude, you will find it lot easier for yourself.....

As I said keep it up, I am enjoying your BS!

 

[sle]

So, fundamentally here I am owning the underlying and using options to mitigate risk. It's a different thing.

In your view, what is the difference between a synthetic and outright option? Not a psychological difference in terms of "owning the underlying" but an actual, tangible and practical impact. Personally, besides some possible transaction cost differentials and maybe some tax considerations, I can't see any. Can you?

 

[ChimpTrader]

In your view, what is the difference between a synthetic and outright option? Not a psychological difference in terms of "owning the underlying" but an actual, tangible and practical impact. Personally, besides some possible transaction cost differentials and maybe some tax considerations, I can't see any. Can you?

You answered yourself! That's why Buffett is Buffett and we are we wasting a beautiful Sunday in a trading forum! That's the difference between a synthetic and outright option.

I might live a life of Prince Charles on credit but owning Royalty is a different experience and to protect it is another. That's another difference.

To add one more difference, 95% traders lose, only 4% win and about 1% win consistently. It's a game of risk mitigation not how much you made or I made?

 

[silver182]

Right answer is none.... No! not even a long naked call, you cannot say that just because their pay-off matches.

But that's exactly what you did!

Another gem popping out of your shitty fingers. There is no listed perpetual options with a strike price of zero, you moron, but, I hope you are aware of a strike that is called ATM (AT-THE-MONEY), where the difference between the Spot and the Strike is the least out of all the available Strikes, almost zero, yeah! So, a Call option at this ATM strike will be directly correlated to its underlying and a Put option at this ATM strike will be inversely correlated to the underlying. But I think you have a different opinion. According to you the theoretical statement which reads and I quote:

is incorrect, right?

You still an idiot to the power infinity! You fix yourself first mate.....Control your testosterone driven attitude, you will find it easy for yourself.....

As I said keep it up, I am enjoying your BS!

OLH..."of little help"...="destriero"....not a steed to be sure..nothing but BS!

 

[silver182]

In your view, what is the difference between a synthetic and outright option? Not a psychological difference in terms of "owning the underlying" but an actual, tangible and practical impact. Personally, besides some possible transaction cost differentials and maybe some tax considerations, I can't see any. Can you?

"A synthetic long stock position is where you emulate the potential outcomes of actually owning stock using options. To create one, you would buy at the money calls based on the relevant stock and then write at the money puts based on the same stock.

The price that you pay for the calls would be recouped by the money you receive for writing puts, meaning that if the stock failed to move in price you would neither lose nor gain: the same as owning stock. If the stock increased in price, then you would profit from your calls, but if it decreased in price, then you would lose from the puts you wrote. The potential profits and the potential losses are essentially the same as with actually owning the stock."

The biggest benefit here is the leverage involved; the initial capital requirements for creating the synthetic position are less than for buying the corresponding stock.

"Synthetic positions" are over advertised to be sure...definitely better for the brokerage houses more commish...

 

[destriero]

The correct answer is long call. The long put and long 100 shares = long call.

Chimp stated that long call = long stock. Wrong. It’s wrong unless the call is perpetual with a strike of zero, but the question was not about perpetual calls. Still isn’t

Correlated is not equivalent. This is the most basic synthetic relationship and you’ve fvcked it sideways.

Shares at 100. Zero rates. long 100 call = long 100 put + 100 shares. long 100 put = long 100 call - 100 shares (short shares).There is your ATM example.

lol to correlated.

Please self-immolate.