Is this is the best position ever if you can do this...

[lotfyisis]

Any opinions from the gods of options about cash secured short stock combined with far dated long call ? It is kind of synthetic long straddle. The holy grail of options if you figured out how to pay for the long calls, but how ? Is short dated selling OTM strangles the answer... Any thoughts

 

[2rosy]

Any opinions from the gods of options about cash secured short stock combined with far dated long call ? It is kind of synthetic long straddle. The holy grail of options if you figured out how to pay for the long calls, but how ? Is short dated selling OTM strangles the answer... Any thoughts

isn't it a synthetic put?

 

[lotfyisis]

isn't it a synthetic put?

according to optiontradingpedia.com, buying twice as many At The Money (ATM) call options as you have short stocks will make it Long Call Synthetic Straddle. This is the original position. I am proposing selling near dated OTM strangles to help pay for the long call. Or whatever other spread strategy to get to pay for the long dated call

 

[jnbadger]

This thread reminds me I haven't traded options for awhile, and I'm pretty rusty. But in the current environment, Implied volatility is pretty high, so won't you experience some IV crush if things rally? Longer term options tend to have higher IV, so I'm not sure selling short term contracts will help you much.

But don't take my word for it. I guess I'm looking for responses as much as you are. Like I said, I'm pretty rusty.

JNB

 

[TheBigShort]

I think you are still yet to read a few books on trading options.
1) vol trading Euan Sinclair
2)Robert Rebenato volatility and correlation.
Everyone wants to be long "cheap" gamma/vega. Figuring out that selling stock and buying a call = a long straddle, will not make you money.

Ps. I think you have it a little mixed up. Its selling stock and buying calls, not buying calls and buying stock.
Also keep in mind, short dated options you are trading gamma -> implied/realized. When you trade options +2 months, you PnL is more effected by vega -> implied/forward.
GL

 

[lotfyisis]

I think you are still yet to read a few books on trading options.
1) vol trading Euan Sinclair
2)Robert Rebenato volatility and correlation.
Everyone wants to be long "cheap" gamma/vega. Figuring out that selling stock and buying a call = a long straddle, will not make you money.

Ps. I think you have it a little mixed up. Its selling stock and buying calls, not buying calls and buying stock.
Also keep in mind, short dated options you are trading gamma -> implied/realized. When you trade options +2 months, you PnL is more effected by vega -> implied/forward.
GL

No, there is no mixup. I stated clearly long call and cash secured short stock; did I mentioned it otherwise

 

[lotfyisis]

This thread reminds me I haven't traded options for awhile, and I'm pretty rusty. But in the current environment, Implied volatility is pretty high, so won't you experience some IV crush if things rally? Longer term options tend to have higher IV, so I'm not sure selling short term contracts will help you much.

But don't take my word for it. I guess I'm looking for responses as much as you are. Like I said, I'm pretty rusty.

JNB

You are correct about the current high volatility but the short stock position is not affected by volatility as it has zero gamma and zero vega. In the meantime, I am benefiting from selling strangles in a high volatility setting

 

[TheBigShort]

No, there is no mixup. I stated clearly long call and cash secured short stock; did I mentioned it otherwise

ah, my apologize, i thought i saw cash secured stock. You cannot cash secure a short position. You receive cash and your loss is far from secure

 

[jnbadger]

You are correct about the current high volatility but the short stock position is not affected by volatility as it has zero gamma and zero vega. In the meantime, Selling strangles in a high volatility setting should offset some of the anticipated IV crash

Gotcha. Good point. Just trying to re-educate myself.

 

[lotfyisis]

I meant short stock as long as one is prepared to buy back if it goes higher.