Bill, I presume your "synthetic risk" strategy included an "or" between the writing calls and buying puts. I have also used the strategy of selling calls, but not just when I can't find shares to short. In fact I find this to be a great way of creating a winning short position, since the stock doesn't have to fall, it only has to stay still for the trade to be a winner. I disagree about going far out when you sell calls, though, since you maximize the time premium by staying at strikes near the price of the underlying with only a short time to expiry.
I have also found that by selling a call that is in the money, you can acheive an indirect short position. If the call expires in the money, your broker will assign you, resulting in a short position in the stock which you may not otherwise have been allowed to put on. The broker may not "check with the loan post", since this is an unusual route to a short. I have had short positions for months on stocks this way, that I was initially told were unshortable due to lack of inventory.
By the way, which broker will give you interest on your shorts? I have been trying to find one for a long time. Hope you can help.
Regards,
Ron |
