Merits of synthetic short call with long call

[badlucktrades]

so i posted my position earlier which i learned what it was actually called.

So what are the merits you find with a calendar synthetic short call, where the short call is on the back month and the long call is in the front month?

i.e

short 100 spy @198
short sept 25 spy 197 put for 6.00
long sept 18 198 call.

 

[galvinlee888]

so i posted my position earlier which i learned what it was actually called.

So what are the merits you find with a calendar synthetic short call, where the short call is on the back month and the long call is in the front month?

i.e

short 100 spy @198
short sept 25 spy 197 put for 6.00
long sept 18 198 call.

What is the purpose and advantage you setup this position? To capture a short term market move down?

What is your plan from now to 18 sept, from 18 sept to 25vsept if price is below or above 198?

 

[badlucktrades]

What is the purpose and advantage you setup this position? To capture a short term market move down?

What is your plan from now to 18 sept, from 18 sept to 25vsept if price is below or above 198?

If it stays below, at expiration youd receive the credit + difference between the short put and your short stock.

and to limit your upside losss with a long call, which can also turn positive with the long call. So, on the upside, im expecting that the theta decay + delta of the short put + long call will be greater than the short stock position. where, id close the short put, and open another short put a a strike determoned by the realized profit.

So i guess its a play that is best used when theres high volatility.

 

[destriero]

You're still not getting it. The synthetic is what you were trading, as in the position could be full reduced with options-only. You should not be trading synthetics! You were short a diagonal put spread. It's indeed a high-volatility strategy, but you're left with a naked short. It's best to have some exposure on the short-end (longer duration for more vega).

You really need to read a book and stop looking here to be hand-fed. There are a ton of good intro-level books out there. Natenberg, Baird, McMillan.

 

[badlucktrades]

You're still not getting it. The synthetic is what you were trading, as in the position could be full reduced with options-only. You should not be trading synthetics!

so youre saying there is an options combination equivalent to what i have on now, that is more effective?

 

[destriero]

Short stock converts the long call into a synthetic long put. So the stock makes it synthetic. Same exposure, but why add an additional commission and edge loss in trading stock?

Long stock and short a call = a short put. Forget the word synthetic. What you need to remember that you are adding an unnecessary position when you add shares to options. The exception would be gamma-scalping. You're not gamma-scalping.

Stock converts calls(puts) into puts(call). We term the stock and option combo a synthetic as it can be reduced to an option.

Every few months a guy comes on this (or any board) and thinks they have the answer when they have done virtually no work on their own. You should not be trading at this point. Go to amazon and buy a book.

 

[badlucktrades]

iv

Short stock converts the long call into a synthetic long put. So the stock makes it synthetic. Same exposure, but why add an additional commission and edge loss in trading stock?

Long stock and short a call = a short put. Forget the word synthetic. What you need to remember that you are adding an unnecessary position when you add shares to options. The exception would be gamma-scalping. You're not gamma-scalping.

Stock converts calls(puts) into puts(call). We term the stock and option combo a synthetic as it can be reduced to an option.

Every few months a guy comes on this (or any board) and thinks they have the answer when they have done virtually no work on their own. You should not be trading at this point. Go to amazon and buy a book.

ive been reading optionsplaybook, some tastytrade vids, some of the other free option sites.

i will look up gamma scalping. im just trying to profit off the movement of thw underlying, by closing one side at a time.

like right now, i can close the sept 11 call, short put, and short stock for profit. right now.

 

[destriero]

There are synthetics to convert calls(puts) to puts as well as synthetic long and short the underlying.

Long put = short shares + long call
Long call = long shares + long put
Short put = long shares + short call
Short call = short shares + short put

All that is needed to convert a call to a put is to add shares in "delta" (i.e., a long put is short delta, so short shares are used). The shares are delta1, so convexity is added (and makes the position =), by adding the call (if you are replicating a listed put) or put (if you are replicating a listed call). By "listed" I mean the call or put on your screen. You can convert any listed put or call into the other by introducing shares.

Long shares = short put + long call
Short shares = long put + short call

The purpose of trading synthetic shares is only for rates/arbitrage and for shorting restricted shares, HTB situations (hard to borrow). It's not something you're likely to ever utilize, so please, just use options, no shares.

I don't know if TastyTrade is recommending using shares in these positions. If so, then they too are unaware of synthetics and should not be recommending anything.

 

[destriero]

iv

ive been reading optionsplaybook, some tastytrade vids, some of the other free option sites.

i will look up gamma scalping. im just trying to profit off the movement of thw underlying, by closing one side at a time.

like right now, i can close the sept 11 call, short put, and short stock for profit. right now.

badluck, you are a millennia away from gamma-scalping. Sosnoff will kill your account, so please take that shit with a grain of salt. Do not close one side at a time. Obviously you're not understanding this and I can't hold your hand here. Take the suggestions that were given you and buy the book.

 

[badlucktrades]

do you have any recommendations for books?

badluck, you are a millennia away from gamma-scalping. Sosnoff will kill your account, so please take that shit with a grain of salt. Do not close one side at a time. Obviously you're not understanding this and I can't hold your hand here. Take the suggestions that were given you and buy the book.