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

thecoder said:
You can only mean the others, as I'm working hard to find a solution to a problem :)
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Did you ever pause and think that maybe there really is no problem with the current model, and you are trying to reinvent a wheel that works fine as it is? Trying to find a solution to a problem that does not exist usually leads nowhere.
 
Overnight said:
Did you ever pause and think that maybe there really is no problem with the current model, and you are trying to reinvent a wheel that works fine as it is? Trying to find a solution to a problem that does not exist usually leads nowhere.
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Come on, nobody would try to solve a problem if he/she is not convinced there is one.
 
Could someone please fill out this table:
Code: 
LS: Long Stock
SS: Short Stock
LC: Long Call
SC: Short Call
LP: Long Put
SP: Short Put

Combinations (of Synthetics):
  LS + SS =
  LS + LC =
  LS + SC = SP
  LS + LP = LC
  LS + SP =

  SS + LC = LP
  SS + SC =
  SS + LP =
  SS + SP = SC

  LC + SC =
  LC + LP =
  LC + SP = LS

  SC + LP = SS
  SC + SP =

  LP + SP =
---
total 15 combinations of 2 possible
 
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thecoder said:
Could someone please fill out this table:
Code: 
LS: Long Stock
SS: Short Stock
LC: Long Call
SC: Short Call
LP: Long Put
SP: Short Put

Combinations (of Synthetics):
  LS + SS =
  LS + LC =
  LS + SC = SP
  LS + LP = LC
  LS + SP =

  SS + LC = LP
  SS + SC =
  SS + LP =
  SS + SP = SC

  LC + SC =
  LC + LP =
  LC + SP = LS

  SC + LP = SS
  SC + SP =

  LP + SP =
---
total 15 combinations of 2 possible
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Are you actually asking for someone to fill out the entry for "long stock" + "short stock?"
 
I just wonder:
Why should one buy a Stock if one instead can get the synthetic version of it even for free (!) by Selling a Put and Buying a Call (with same params) ! :)

Same with the synthetic version of Short Stock!

Cf. table below with the Synthetics.

Here's also proof that it indeed is costless, ie. a free lunch! :) See column "Debit/Credit = 0" :

Ie. you get something for free. It can gain in value or lose in value. But if it loses then you have to pay the losses...
Is this the right interpretation? IMHO yes.
 

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TheGoonior2 said:
Are you actually asking for someone to fill out the entry for "long stock" + "short stock?"
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Nope, all clear now. Here's the full table:
Code: 
LS: Long Stock
SS: Short Stock
LC: Long Call
SC: Short Call
LP: Long Put  
SP: Short Put

Combinations (of Synthetics):
  LS + SS = (neutral nonsense)
  LS + LC = (like a LS #1)  
  LS + SC = SP
  LS + LP = LC
  LS + SP = (like a LS #2)

  SS + LC = LP
  SS + SC = (like a SS #1)
  SS + LP = (like a SS #2)
  SS + SP = SC

  LC + SC = (neutral nonsense)
  LC + LP = (like a "V")
  LC + SP = LS     BUT: this is even a free lunch! :-)

  SC + LP = SS     BUT: this is even a free lunch! :-)
  SC + SP = (like an "A", ie. inverse of "LC + LP")  

  LP + SP = (neutral nonsense)
---
total 15 combinations

s.a. https://tickertape.tdameritrade.com/trading/synthetic-options-strategies-15457
 
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VolSkewTrader said:
Kevin points out exactly how your "FairPuts" could easily be arbitraged. If you sell a standard call and hedge one-to-one with long stock you synthetically create a short standard BSM put, which you are trying so hard to get rid of. By creating a short standard BSM put (by selling the BSM call against long stock 1 to 1), and then simultaneously buying your "FairPut" one could arbitrage the difference between the two. Since your "FairPuts" start out paying much more than standard BSM puts, the algos would within minutes arb this difference until your "FairPuts" paid out the same as a standard BSM put, which defeats the whole purpose of your invention.
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I now analyzed this, and @Kevin Schmit, and your above re-formulation of his objection, is right. Unfortunately.
Also the 2nd objection of @Kevin Schmit is true.
Hmm. too bad... Game Over! :-(
 
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