Beating the Prime

Discussion in 'Options' started by dis, Dec 17, 2002.

  1. Metooxx,

    It's funny you mentioned that strategy, I was just wondering if someone could profitably do that last week.

    What happens if/when you are called out of the position. Do you just liquidate your put at market and roll up? Or, do you have a price point at which you assume you will be called out (assuming underlying is above srike of the sold call), and then purchase additional underlying shares in case call is excercised?

    I'm interested in hearing more...thanks.
    #21     Dec 19, 2002
  2. Hey Metooxx,

    Maybe you could call this strategy the Dog Collars of the Dow.
    #22     Dec 19, 2002
  3. Trajan


    You are talking about some sort of structured product. They don't market those through retail channels in the U.S. very much.
    #23     Dec 20, 2002
  4. Trajan


    I'm not sure what Metooxx is refering to, the conversion, the collar or some sort of front spread. A collar usually implies a 1 to 1 ratio, which would make it the same as a vertical call spread. The third is what my first trading manager told me to do, "buy puts, buy stock, sell calls." Buy otm puts, buy stock, sell otm calls, this would be done in a ratio so that the greeks are flat. Pretty simple. Then trade against the position to keep the greeks flat and for profit.
    #24     Dec 20, 2002
  5. 1 to 5% per month on a diversified prtfolio of equities.

    Never tried it on bonds.

    Never tried it on futures.

    Scan for 5 to 10% monthly yield on the short call less the long put cost.
    #25     Dec 21, 2002
  6. Works off of the disparity in a rich short option against a cheap long option; i.e. long stock, short ITM or ATM call, long OTM put or short stock, short ITM or ATM put, long OTM call.
    #26     Dec 21, 2002
  7. Not done at breakeven and strikes are not the same.
    #27     Dec 21, 2002
  8. You want to be assigned; liquidate the long option and move on...

    Don't understand the last part?
    #28     Dec 21, 2002
  9. You can call it anything you like; as long as it makes money ...
    #29     Dec 21, 2002
  10. Yes and yes.

    But I thought we were talking about someone doing it themselves.

    Hard part is the cost of data and scanning ...
    #30     Dec 21, 2002