Married Calls

[exQQQQseme]

Thanks again Ursa. Regarding "expected dividends", I have a pretty firm rule that I shy away from shorting dividend paying stocks. Reason is that if I am short the stock on the morning it goes ex-dividend I have to pay the dividend. That's not a lot of fun.

In this regard, QQQQ is a killer. Without any advance announcement, it goes Ex-Div the Thursday prior to Expiration Friday on the quarterly months (Mar, Jun, Sep, and Dec). What's worse is DIA, which also goes Ex-Div without advance notice, but monthly instead of quarterly. Hence, one has to be completely nuts to short DIA, and only a little bit crazy to short QQQQ.

Bob

 

[yip1997]

Quote from MajorUrsa:

You're hijacking thread about a different subject. Maybe start a new one.

Ursa..

I am sorry. I started one but nobody seems to care as most of the synthetics experts are having fun here.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=85504

4Q has consumed all the time of the option experts that they no longer have time to look at other threads.

I am desperate to see the real world application of synthetics. If they are really equivalent, I should get a mathematical explanation for this case, right?

 

[MTE]

Quote from yip1997:

I am sorry. I started one but nobody seems to care as most of the synthetics experts are having fun here.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=85504

4Q has consumed all the time of the option experts that they no longer have time to look at other threads.

I am desperate to see the real world application of synthetics. If they are really equivalent, I should get a mathematical explanation for this case, right?

See my answer in your thread!

 

[yip1997]

Quote from MTE:

See my answer in your thread!

MTE,

Thanks a lot. I realized that I would get the answer if I posted it here.

In general, Is it true that ITM bid ask spread > ATM > CTM > OTM?

 

[MTE]

Quote from yip1997:

MTE,

Thanks a lot. I realized that I would get the answer if I posted it here.

In general, Is it true that ITM bid ask spread > ATM > CTM > OTM?

Yup! Generally, it's really just a function of the price - ITM are high priced hence the spread is high.