New invention for the derivatives market - How to profit of it?

[thecoder]

Announcement:
The algorithm of FairPut will be posted here soon. It will be basic C code.
I'll make it so that it will calculate all of CALL, PUT, and FairPUT, incl. the basic Greeks.
Ie. a Black-Scholes-Merton (BSM) calculator with FairPut integrated.

 

[newwurldmn]

@newwurldmn, does this answer your question? :

Synthetic Short Put
"A combination of owning stock and having a short call position on that stock
essentially has the same potential for profit and loss as being short on puts."
(https://www.optionstrading.org/improving-skills/advanced-terms/synthetic-positions/ )

For FairPut the same mechanism applies, though here of course FairPut is used instead of normal Put,
ie. then it's called "Synthetic Short FairPut".

So how do you synthetically recreate it if the payout isn't the same as the vanilla puts?

 

[thecoder]

So how do you synthetically recreate it if the payout isn't the same as the vanilla puts?

FairPUT has always the same premium and the same payout of a CALL (be it long or short, respectively).
I would say these facts even simplify many other such calculations like that of yours.

And: in a market where vanilla Put has already been replaced by FairPut, there will be just one option price for both Call and FairPut. This simplifies things further, ie. less data to store in memory and in databases, and of course also on the displays .

I think it simplifies hedging significantly, though as admitted I'm not an expert in synthetics nor the many hedging variants.
But I'm sure/confident it very well does, since the overall maths for hedging has now become much simpler with FairPut together with its mirror companion, the vanilla Call.

For Delta Hedging I would recommend the use of "MyDelta" over the normal Delta
(maybe I better should rename it to "FairDelta" Yes, I'll do! )
More on this I'll post soon.

 

[destriero]

So how do you synthetically recreate it if the payout isn't the same as the vanilla puts?

I know this is rhetorical but it cannot be synthetically-derived. He's a 12-step moron that discovered vol a month ago.

 

[thecoder]

@Hey destriero, you POS, don't spread lies here about me.
Moderator, please take action against this liar.

 

[destriero]

@Hey destriero, you POS, don't spread lies here about me.
Moderator, please take action against this liar.

What? That you're stupid? I don't really think that your capacity in that regard is open to interpretation.

 

[thecoder]

Thx moderator, for removing the recent spam postings here.

 

[thecoder]

Announcement:
The algorithm of FairPut will be posted here soon. It will be basic C code.
I'll make it so that it will calculate all of CALL, PUT, and FairPUT, incl. the basic Greeks.
Ie. a Black-Scholes-Merton (BSM) calculator with FairPut integrated.

Some changes in plan:
- the code will be in basic C++ (using the GNU C++ compiler g++ on Linux), not C.
- the code will be published at GitHub ( https://github.com/FairPut ), not here.

 

[destriero]

We've been discussing a new kind of put option called a DumbPut. It pays out a random number. i'm going to put the C++ code on here after i patent it!

_neww

 

[Option_Attack]

Can't you understand, who would back this? It would be like opening a casino that pays out 103% of the take.