Perpetual Options

[riskfreetrading]

Quote from atticus:

You truly are out of your depth. Here you go. I will write you a SPY 160 strike perpetual call at 65.00 at 27% vola. I'm running a special for today only! I'll sell you a 120-year 160 euro call at 62.00! PM for wire details on your haircut. What you don't know about replication would fill the Library of Congress.

I did not check the numbers, but many problems with your offer:

1. Your option is not perpetual. Pick a dictionary and read the meaning of perpetual. 120 years is not.
2. Your vol assumption is too high.
3. Counter party risk should be zero (currently it is infinite.)
4. Make a market at all strikes, for puts and calls, ITM and OTM.
5. To make sure you believe your own prices, provide bids and asks,so we can keep you in check.
6. Other things...

But the main points that you have to clear are: Perpetual (but priced as a 100 years using BSM), eliminate counterparty risk via the OCC, and agreement on Vol.

 

[MTE]

Quote from riskfreetrading:

I did not check the numbers, but many problems with your offer:

1. Your option is not perpetual. Pick a dictionary and read the meaning of perpetual. 120 years is not...

Who cares, it's not like you'll be around to exercise it!

 

[riskfreetrading]

Quote from atticus:



When should a trader choose a covered call over a same-strike short put? Finite duration, assuming p/c parity and no discount arbitrage. Google searches won't help; so please just take another stab. You got it wrong on the first try.

"He is noticeable for nothing in the world expect in the markedness by which he is noticeable for nothing," Poe once wrote.

 

[atticus]

Quote from riskfreetrading:

I did not check the numbers, but many problems with your offer:

1. Your option is not perpetual. Pick a dictionary and read the meaning of perpetual. 120 years is not.
2. Your vol assumption is too high.
3. Counter party risk should be zero (currently it is infinite.)
4. Make a market at all strikes, for puts and calls, ITM and OTM.
5. To make sure you believe your own prices, provide bids and asks,so we can keep you in check.
6. Other things...

But the main points that you have to clear are: Perpetual (but priced as a 100 years using BSM), eliminate counterparty risk via the OCC, and agreement on Vol.

You're uniquely stupid. I made a 27-vol market in the perpetual call: I will write you a SPY 160 strike perpetual call at 65.00 at 27% vola I'm not going to think for you; feel free to ask for another strike. You asked for a perpetual call and now the vol is too high? You said you were a buyer? Too expensive now?

You're out of your depth because you'll never know duration is the least important parameter beyond x-years; the 100-call price differs very little from the 200-year, 300-year, etc.

 

[dipper17]

Couple of pompous jackasses going at it on an internet forum about something they will not and cannot ever trade.

“getcha popcorn”

 

[atticus]

Quote from riskfreetrading:

"He is noticeable for nothing in the world expect in the markedness by which he is noticeable for nothing," Poe once wrote.

And yet the question remains unanswered. Pathetic that an admittted "Option Mentor" can't answer something so trivial. A mentor doesn't know when it's preferable to write a CC over a put?

 

[atticus]

Quote from dipper17:

Couple of pompous jackasses going at it on an internet forum about something they will not and cannot ever trade.

“getcha popcorn”

They trade OTC all the time. Perpetual lookbacks [Russians] trade in the billions every year. Solve for a mid-term delta and simply multiply by spot and price it with a lot of edge. The duration is not the issue. The peanut gallery is filling up.

 

[El OchoCinco]

Quote from dipper17:

Couple of pompous jackasses going at it on an internet forum about something they will not and cannot ever trade.

“getcha popcorn”

Correction, one person (Atticus) who knows options inside and out, and another who simply has mastered the art of circular and evasive writing. Speak not of what you know little

 

[El OchoCinco]

Quote from dipper17:

Couple of pompous jackasses going at it on an internet forum about something they will not and cannot ever trade.

“getcha popcorn”

Atticus:

They trade OTC all the time. Perpetual lookbacks [Russians] trade in the billions every year. The peanut gallery is filling up.

 

[dipper17]

Coach,

I understand what OTC options are and way back in the late 1980's and very early 1990's made prices on an otc currency options desk. I realize back then even what was an exotic is not nearly as sophisticated as what is out there now.

Point being the arguing about this on an internet forum can not yield a winner of any value for either party.

Sorry if I was too harsh, I don’t see these guys putting up any trade through this dialog.