Does there exist a replacement (ie. a synthetic) for ShortStraddle or ShortStrangle (ie. a ShortCall plus ShortPut) that can be created w/o using ShortCall and ShortStock ?
Synthetic for ShortStraddle or ShortStrangle
- Thread starter earth_imperator
- Start date
lol no. Excluding "known" synthetics to arrive at a magical synthetic isn't going to result in a new discovery here. You just need to stop.
Straddle = long call, long put at x.
Synthetic straddle calls = short stock, long 2x calls
Synthetic straddle puts = long stock, long 2x puts
half lot = 50 shares, long 1x (call or put defined by share-sign)
*There are no other straddle synthetics, you moron.
The difference between calls and puts? Shares.
There are split-strike synthetics that don't involve shares/spot.
Box arb = L(S) inside strangle, (S)L outside strangle, i.e., there is no structural advantage to shorting the inside strangle bc of the larger credit!
Calendars = puts and calls at a strike are equivalent (even if prem is different), i.e., the anti-FFS trade
Flies = flies are equivalent with puts and calls provided strikes x ratios are =
etc.
Straddle = long call, long put at x.
Synthetic straddle calls = short stock, long 2x calls
Synthetic straddle puts = long stock, long 2x puts
half lot = 50 shares, long 1x (call or put defined by share-sign)
*There are no other straddle synthetics, you moron.
The difference between calls and puts? Shares.
There are split-strike synthetics that don't involve shares/spot.
Box arb = L(S) inside strangle, (S)L outside strangle, i.e., there is no structural advantage to shorting the inside strangle bc of the larger credit!
Calendars = puts and calls at a strike are equivalent (even if prem is different), i.e., the anti-FFS trade
Flies = flies are equivalent with puts and calls provided strikes x ratios are =
etc.
Synthetic LongStrangle:
1 LongStock
1 LongPut @ Strike=Spot-x
1 LongPut @ Strike=Spot+x
1 LongStock
1 LongPut @ Strike=Spot-x
1 LongPut @ Strike=Spot+x
Correction: the strikes can be chosen freely, ie. any 2 different strikes can be taken.
If the strikes are the same then the result is a Synthetic LongStraddle, as was already said in prev posting.
That's a long synthetic call at "-X" and a long put at "+X"
Which reduces to an inside strangle. Does not conform to your requirements and obv it is not reduced (mine is). See my explanation about split strike synthetics.
Yeah, I stand corrected; you can do it without a short call and short stock, so what?
A short call would be the lower leg of an inside (guts) strangle (or) the upper leg of an outside straddle.
There is zero utility in what you're asking for. None. The utility of synthetics is deriving the fwd on cash vol-instruments and to short into a share HTB position. To trade overnight in a more liquid contract (synthetic straddle struck OTM v natural struck ITM, etc.)
A short call would be the lower leg of an inside (guts) strangle (or) the upper leg of an outside straddle.
There is zero utility in what you're asking for. None. The utility of synthetics is deriving the fwd on cash vol-instruments and to short into a share HTB position. To trade overnight in a more liquid contract (synthetic straddle struck OTM v natural struck ITM, etc.)