my rimm synthetic call

Quote from cashmoney69:

Thanks. Spin, I'm bullish on the stock, but the reason I bought the put, is because IF the stock goes down, like it did today, then I make money from the stock falling. Basically, its like insurance. I made 135.00 on my put today, but lost 175 from being long. So you see from having the put..i dont lose as much money, as i would normally.

side note... how did i make money on my put?..its still otm.
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I think the point spin is making is that simply buying the call is the same as buying the stock plus put combination. I'm not sure if you're aware of the synthetic relationship.
db
 
Quote from daddy'sboy:

I think the point spin is making is that simply buying the call is the same as buying the stock plus put combination. I'm not sure if you're aware of the synthetic relationship.
db
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I understand, but I like the downside protection. Rimm is a big mover, so I feel better this way.
 
Quote from cashmoney69:

I understand, but I like the downside protection.
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A call gives you the exact same downside protection. In both cases, the maximum you can lose is the price drop down do your strike, plus the time premium you paid for the option.

A call is equivalent to 100 shares plus a put in every possible way.
 
Quote from cashmoney69:

I understand, but I like the downside protection. Rimm is a big mover, so I feel better this way.
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Well, not really, or you'd realize the combo is actually inferior.
 
Cash, you have a couple of real good posters on your thread here...

If I may be so bold as to recommend that you engage them to understand why the call is superior, and you will have an arrow to add to your quiver... and it will last you your trading lifetime! :)
 
Quote from cashmoney69:

long 100 rimm at 98.02

buy 1 nov 95 put
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Hey Cash,

Not saying anything is wrong with your trade and I wish you well. Why did you not sell a call against the stock to offer some protection and have time working for you? I am assuming you feel rimm can / will move BIG so this is your best bet. also, why not long a call instead of the stock?

thanks and best of luck!
 
Quote from 1Reason:

Hey Cash,

Not saying anything is wrong with your trade and I wish you well. Why did you not sell a call against the stock to offer some protection and have time working for you? I am assuming you feel rimm can / will move BIG so this is your best bet. also, why not long a call instead of the stock?

thanks and best of luck!
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i have to disagree -- selling covered calls is not the way to profit on big move. If you want a strategy less sensitive to IV changes as well as decay, just buy vertical spreads. ie 95/100 oct call spreads.
 
Quote from bigmoose:

Cash, you have a couple of real good posters on your thread here...

:)
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Very true.

Stay humble and listen up and you might stumble upon some wealth...
 
Quote from 1Reason:

Hey Cash,

Not saying anything is wrong with your trade and I wish you well. Why did you not sell a call against the stock to offer some protection and have time working for you?
thanks and best of luck!
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I just wanted to try something different. And plus with this strategy, I could profit either way..just close out one position and ride the other to a reasonable profit..at least that would be the idea. Yes, I could have just bought the call, but the premiums are high and didn't want to risk that much, so at the time i guess I was thinking I'd rather just pay a little more in commission instead.

side note: What do you guys pay per ticket?..i pay 7.99, and 1.25 per contract.

question: do I pay a 2nd premium when i close out an option trade or just once?
 
to the people asking on why he didn't just buy a call. The NOV 95 calls were down 1.00 which would of lost him 100 dollars on that trade. He lost 175 on his long but made 135 on his put, putting him down 40 dollars instead of a 100. So can someone tell me why just buying the call would be better?
 
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