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Strategies & Market Trends : The coming US dollar crisis
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To: stan_hughes who wrote (844)8/31/2007 6:11:06 AM
From: Real Man  Read Replies (1) of 71456
 
Hey, you get no extra premium for selling deep in the money
options, but you do get interest. Deep in the money options
are really like costly futures.
Someone indicated there was a put volume as well
(deep in the money). So, you short deep
in the money puts and deep in the money calls for a market-
neutral position, and borrow the cash. Only an entity with
low enough margin requirements could do it. However, someone
also had to buy those puts and calls. So... Someone just
borrowed some money from someone else using the options market,
a reasonable assumption given the credit crunch. Moreover,
I think... if you sell the same amount of deep in the money
puts and calls for a neutral position, not only you get the
money, you also pocket the interest on the money you borrowed.
A lot of interest on multi-billion dollar position. Am I wrong
on that? -g-
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