No, I am not concerned with a couple of pennies, or a few dollars.
My original concern was more with the effect of changes in volatility, since the amount of money committed to the long ITM call is different than the amount of money commited to the put in the married put senario.
In the table posted above (for GRMN), the resultant large swing in volatility I tested impacts the value of the call position more significantly than the married put position if the option goes near the money or slightly out, and the difference is greater the farther away from expiration the option is, as your proofs point out. This is important because things do not stay constant, and in developing a plan B an investor may want to see the severity of these moves.
With respect to another position where there are equivalents, the risk reward of a collar may be 1:1 and for some investors that is acceptible. An eqivalent put spread the R:R may be higher say 3:1 or 4:1 at max loss. To some investors, that attribute may make the put spread unattractive as a bear market hedge, and that may be a dealbreaker. However, if an investor buys a call spread, the max loss has lessened considerably and the investor has an equivalent. So, perhaps in terms of equivalents, one equivalent position is more equal than another.
Thanks for helping me thru this
Tom
My original concern was more with the effect of changes in volatility, since the amount of money committed to the long ITM call is different than the amount of money commited to the put in the married put senario.
In the table posted above (for GRMN), the resultant large swing in volatility I tested impacts the value of the call position more significantly than the married put position if the option goes near the money or slightly out, and the difference is greater the farther away from expiration the option is, as your proofs point out. This is important because things do not stay constant, and in developing a plan B an investor may want to see the severity of these moves.
With respect to another position where there are equivalents, the risk reward of a collar may be 1:1 and for some investors that is acceptible. An eqivalent put spread the R:R may be higher say 3:1 or 4:1 at max loss. To some investors, that attribute may make the put spread unattractive as a bear market hedge, and that may be a dealbreaker. However, if an investor buys a call spread, the max loss has lessened considerably and the investor has an equivalent. So, perhaps in terms of equivalents, one equivalent position is more equal than another.
Thanks for helping me thru this
Tom
