What is the name of this position?

[rallydog]

Quote from syswizard:

yes, but the delta is certainly not equivalent to two long calls. That would be the case if the puts were ITM, correct ?

Delta varies with strike & time, so yes it is equivalent with two long calls, I just can't tell which ones without knowing the underlying.

 

[donnap]

Quote from rallydog:

Delta varies with strike & time, so yes it is equivalent with two long calls, I just can't tell which ones without knowing the underlying.

Hello. Third post by MTE had it right. Also Spin's assessment that it is closer to 1 long call is accurate.

How is it that you come up with two calls?

 

[rallydog]

Quote from donnap:

Hello. Third post by MTE had it right. Also Spin's assessment that it is closer to 1 long call is accurate.

How is it that you come up with two calls?

Look, last post, you're splitting hairs here; this is a two sided position so approximately equivalent with two long calls. If you want to get really technical then add up the total position delta, WHICH YOU CAN'T because it's a THEORETICAL position! Okay?

Good grief!

 

[donnap]

Quote from rallydog:

....synthetically your delta's are equivalent with two long call positions.

If you want to get really technical then add up the total position delta, WHICH YOU CAN'T because it's a THEORETICAL position! Okay?

You contradict yourself in the same thread. Well, which is it? Can you add the deltas with unspecified strikes or not? You do realize that a bull put spread is not a call.

You answer is incorrect - I'm not splitting hairs - just stating the obvious.

 

[spindr0]

Quote from rallydog:

If you want to get really technical then add up the total position delta, WHICH YOU CAN'T because it's a THEORETICAL position!

Add the delta up...
But you can't ...
because it's theoretical?
LOL.

Feel free to peruse any of the nearly 3,000 optionable stocks and find one where the OP's position provides the same result as 2 long calls. Any way you cut it, a bull put spread is not a long call.

 

[SomeYoungGuy]

It's a "drcha whammy". You invented it, you get it named after you.

 

[jamesbp]

Quote from drcha:

Short 1 OTM put
Long 2 farther OTM puts
Long 100 shares

You can 'dissect' this position by taking out the conversion [-u +c -p] at one of the put strikes.

For Example;

Long 100 shares
Short 1 put at 80 strike
Long 2 puts at 70 strike

If you dissect the conversion at the 80 strike then the synthetic equivalent of this position is

Short x2 70/80 put spreads
Long x1 80 call

Screenshot attached;

Original position shown as 'Adjusted Raw Position'
Synthetic equivalent position shown as 'Adjusted Net Position'

Hope this helps
James

 

[donnap]

Quote from jamesbp:



Long 100 shares
Short 1 put at 80 strike
Long 2 puts at 70 strike


Short x2 70/80 put spreads
Long x1 80 call

The 3rd post in this thread had the correct breakdown. You meant x1 put spread?

Long put + 100s = call
Leaving x1 put spread

 

[jamesbp]

Quote from donnap:

The 3rd post in this thread had the correct breakdown. You meant x1 put spread?

Long put + 100s = call
Leaving x1 put spread

Donna

No, dissection can be done in different ways;

I specified that if this position was dissected at the 80 strike it would be the equivalent of -2 x 70/80 put spreads and +1 80 call.

If you dissected at the 70 strike; you would have, as you say, the equivalent of -1 70/80 put spread and +1 70 call.

In practice, I personally would find the first dissection easier to manage as the put spreads are at lower strikes than the call.

However, that is the beauty of dissection, it can be done to suit your own preferred way.

Cheers
James


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[donnap]

Quote from jamesbp:

Donna

No, dissection can be done in different ways;

I specified that if this position was dissected at the 80 strike it would be the equivalent of -2 x 70/80 put spreads and +1 80 call.

If you dissected at the 70 strike; you would have, as you say, the equivalent of -1 70/80 put spread and +1 70 call.

In practice, I personally would find the first dissection easier to manage as the put spreads are at lower strikes than the call.

However, that is the beauty of dissection, it can be done to suit your own preferred way.

Cheers
James


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Your answer is incorrect. The 3rd post in this thread had a correct breakdown.

You do realize that if you match one long put with the stock for the synthetic call - there is only one long put left.