Newb Here

[HtownTrader]

Hello,

I'm a newb, so I have a couple of newb questions. Any responses would be greatly appreciated!

How do calls and puts move in relation to one another? For example, if the price of a stock increases by $1, leading to a particular call increasing in value by a certain amount, can the value of the corresponding put be expected to decrease by a similar/same amount? Should I have a certain expectation/is there a rule of thumb when it comes to this topic? Can I read/learn more about this somewhere? Is this even an important topic to focus on?

How prevalent/good/useful is this strategy? When I buy calls, I also buy a smaller amount of puts. I assume this would allow me to buy a little bigger position and not stop out too quickly knowing that the puts will increase in value if the stock price decreases in value. If the calls go up in value, I could potentially choose to wait for the puts to come back in value or just take the loss on those then and there knowing they did the job of protecting me while I'm still in the trade.

 

[eraser]

Hi there! It seems like you want to do a gamma scalping on a long straddle position. ATM options with lower DTE work best for this strategy. You have to read more about delta (of separate options and for position), gamma, theta, gamma scalping.

'When I buy calls, I also buy a smaller amount of puts', you will have to buy a delta-neutral position and buy/sell stock(or options) when one side of position gains more than another side loses, and make the position delta-neutral again.

Good luck!

 

[OptionsOptionsOptions]

...... How do calls and puts move in relation to one another? For example, if the price of a stock increases by $1, leading to a particular call increasing in value by a certain amount, can the value of the corresponding put be expected to decrease by a similar/same amount?.......

• Time decay takes a nibble out of both calls and puts.
• So the calls and puts do not increase/decrease in tandem.

 

[Lou Friedman]

Hello,

I'm a newb, so I have a couple of newb questions. Any responses would be greatly appreciated!

How do calls and puts move in relation to one another? For example, if the price of a stock increases by $1, leading to a particular call increasing in value by a certain amount, can the value of the corresponding put be expected to decrease by a similar/same amount? Should I have a certain expectation/is there a rule of thumb when it comes to this topic? Can I read/learn more about this somewhere? Is this even an important topic to focus on?

How prevalent/good/useful is this strategy? When I buy calls, I also buy a smaller amount of puts. I assume this would allow me to buy a little bigger position and not stop out too quickly knowing that the puts will increase in value if the stock price decreases in value. If the calls go up in value, I could potentially choose to wait for the puts to come back in value or just take the loss on those then and there knowing they did the job of protecting me while I'm still in the trade.

Hi newb,

Great place to start is the CBOE (Chicago Board of Exchange) web site. A lot of no BS free info, especially for newbies. Best of luck on your new adventure.

 

[cvds16]

Try to read up on the Greeks and all will become clear

 

[vegamedic]

• Time decay takes a nibble out of both calls and puts.
• So the calls and puts do not increase/decrease in tandem.

a garbage statement that does a garbage job of answering the question, which was

How do calls and puts move in relation to one another?

i'd suggest doing a bit of reading into put-call parity, which explains the relationship between the price of puts and calls of the same strike/series. while only strictly true for european options, i think it's a good starting point.