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Trading strategies with lower spread?
- Thread starter mizhael
- Start date
Quote from dipper17:
Technically long call short stock or long put long stock is a straddle too. If you wanted the greatest amount of Vega per expiration youâd look at the atm straddle, but you could also do 2 calls and stock or 2 puts and stock.
As long as you stick with an underlying thatâs listed on 5 or 6 of the exchanges and has reasonable volume youâll find the spreads in the options very very tight these days. In many case a penny or two wide.
Long call short stock = straddle? I'm trying my best to plow through Cottle's material, so my understanding of synthetics is somewhat limited at this point, but can you elaborate on this? Doesn't seem to fit the pnl diagram of a straddle when I plot it.
My understanding is your're describing a synth put.
Quote from thegazelle:
Long call short stock = straddle? I'm trying my best to plow through Cottle's material, so my understanding of synthetics is somewhat limited at this point, but can you elaborate on this? Doesn't seem to fit the pnl diagram of a straddle when I plot it.
My understanding is your're describing a synth put.
2 calls contracts and -100 shares of stock
Quote from thegazelle:
Long call short stock = straddle? I'm trying my best to plow through Cottle's material, so my understanding of synthetics is somewhat limited at this point, but can you elaborate on this? Doesn't seem to fit the pnl diagram of a straddle when I plot it.
My understanding is your're describing a synth put.
You are right, long call+short stock is a long put, but 2 long calls+short stock is a straddle.
Quote from dipper17:
Technically long call short stock or long put long stock is a straddle too. If you wanted the greatest amount of Vega per expiration youâd look at the atm straddle, but you could also do 2 calls and stock or 2 puts and stock.
As long as you stick with an underlying thatâs listed on 5 or 6 of the exchanges and has reasonable volume youâll find the spreads in the options very very tight these days. In many case a penny or two wide.
ATM options on SPX have too large spreads. Don't know why...
Quote from MTE:
You are right, long call+short stock is a long put, but 2 long calls+short stock is a straddle.
long call+short stock is a long put - K, and 2 long calls+short stock is a straddle - K...
Why don't directly buy straddle, then?
You want to pay the additional transaction costs on stock?
Quote from mizhael:
long call+short stock is a long put - K, and 2 long calls+short stock is a straddle - K...
Why don't directly buy straddle, then?
You want to pay the additional transaction costs on stock?
Because it is easier to scalp the stock (i.e. adjust the deltas of the position using the stock) since it is more liquid and has less slippage.
Quote from mizhael:
ATM options on SPX have too large spreads. Don't know why...
The SPX is a single listed product on the CBOE in addition there is no true electronic access to the market. When you send an electronic order it lands on a broker box who then has to key it in the CBOE system, and represent it. The SPX is really an institutional product with much of the volume coming off the phones to the floor brokers where they can shop those orders both to the pit and to off floor liquidity guys. Lots of crossing of orders goes on.