With that kind of logic, the guy is just monkeying around.
my rimm synthetic call
- Thread starter cashmoney69
- Start date
With that kind of logic, the guy is just monkeying around.
lol, agree with damnit, the whole logic of the original post does not make much sense. Buy the call in this example. My point was that put call partity does not hold in a STRICT sense. There are bounds in between which call and put prices can deviate from put call parity due to skew, transaction costs, lending bid/ask spreads and still not permit arbitrage. If he had the edge to trade the bounds maybe because he is a market maker, enjoyes lower transaction costs than all of us, or has other arrangements that allow him to minimize bid/ask spreads for securities lending rates then he can profit from short term put and call price variations by trading in the synthetic (I only talk about this specific example mentioned by the poster). Otherwise it makes NO SENSE WHATSOEVER to double transaction costs by trading the long stock and put. PERIOD. It just does not make any sense and he WILL NOT enjoy any benefit over a straight call (again I am only pointing to the situation posted).
I was not clear earlier and i apologize for that. Also, my initial reply saying that calls>put due to skew is easily misunderstood because I did not explain well what I meant with that.
nice trade cashmoney...assuming you held on to the stock..(also those that sold the vols should be taking $$$ to the bank 
)
BTW there was nothing wrong with your trade...you wanted to be long the stock with a bit of a hedge in place. There are many "options" out there and everyone gets to chose what works best for them.
)BTW there was nothing wrong with your trade...you wanted to be long the stock with a bit of a hedge in place. There are many "options" out there and everyone gets to chose what works best for them.
Quote from RichardRimes:
nice trade cashmoney...assuming you held on to the stock..(also those that sold the vols should be taking $$$ to the bank
BTW there was nothing wrong with your trade...you wanted to be long the stock with a bit of a hedge in place. There are many "options" out there and everyone gets to chose what works best for them.
I fucked up big time...omg!!.
OK, I sold the stock yesterday in after hours, and made 242.00 , but held the put because i couldnt sell it...well I didnt get up till 11:00 and got to my computer to see that I was down 474.00 on the put and rimm was up 11.3pts!... I would have made 1,400 on my long position alone if I still had it.
If you want to trade options in conjunction with stocks pick up coach Phil's book..."The Option Trader Handbook" Jabour/Budwick It has quite a few illustrations on how to use options to adjust and improve your equity trading. GL next time oh yes its an easy to understand book!
oh yes that is a good lesson...when you close out your position make sure you close out of ALL your position and you can't trade options after hours!!!:eek:
I wish that I had a nickel for every time I've said that. I know it's painful.
It's part of trading, though and learning. Had you held the position and RIMM tanked, your losses could have been worse. Hindsight is 20/20.
There's the old saying, "you can be right and still lose money." The market has a way of making chumps out of all of us from time to time.
BTW - thanks for posting this trade. Any real trader has been there.
Quote from spindr0:
And had RIMM dropped 10+ pts this AM, thereby making the put a winner, someone would be saying, "There's the logic for trading the synthetic call."
Obviously, but my point is simply that hindsight is perfect. It's silly to discuss what should have been done, post-mortem.
Well, sorry to hear, but you learned your lesson and it sounds it was a very cheap lesson, indeed. Recommend 1) you dont blindly listen and put on a position mentioned on "Fast Money" in the future (your position sounds very similar to what was mentioned about the TV show on another thread), 2) as mentioned, dont ever again take off your hedge if you put it on as a hedge in the first place, 3) minimize transaction costs (most traders who would barely break even end up with a loss because of transaction costs. While you cant eliminate them you can optimize them, meaning here......trade the call (although for your particular view on RIMM there would have been better and cheaper strategies out there, already mentioned by another poster)