Edamo, don't mean to intrude on your discussion with GV. I have no opinion on the strategy either of you are proposing. But perhaps a formula is relevant:
Stock = + call - put
So, when either of you talk about creating a synthetic stock position, if you purchased a March Dell 85 call and sold the March Dell 85 put, through the use of options, you've created a synthetic long position.
Similarily,
Call = stock + put
So, by effectively holding long stock and buying a put, you've created a synthetic call position.
Also,
Put = Call - stock
So by shorting the stock and buying the call, you've created a synthetic put.
Finally,
-Put = Stock - call
So you create a synthetic "put sale" put by buying the stock and selling a call (the typical buy-write strategy)
Don't mean to confuse anybody here, but just offer additional information. As we know, alot of things work in the market. It's a matter of individual risk preferences that the fact that the market is a zero sum game that allows for justification for each side of the trade by the MM or the individual investor.
Best regards,
Mark A. Peterson |
