capped warrants

Discussion in 'Options' started by gsgs, Aug 15, 2011.

  1. gsgs


    these are better than options, IMO.
    How is it called for options ?

    A) you buy S+P500 call base 1100 and you sell S+P500
    calls base 1200, as one combined contract.

    B) you buy S+P500 put base 1200 and you sell S+P600 put base 1100
    as one combined contract

    expiry end of 2011

    now A+B together are worth exactly 100, if you
    have A+B together it can be settled at 100

    so selling A is the same as buying B and the margin is just the
    price of B. So you can sell options with reduced margin
    and better transparency.

    these could then be traded as ETFs or separate option contracts.

    there are some of these capped/floored warrants in Europe,
    I can't find them in USA.
    Societe Generale has some on the CAC, but they would require
    more than 100 in above example.

    The best possible derivative, high leverage, limited risk.
    Like binary options. However brokers for binary options
    require an additional "fee" like Societe Generale
    in the example above - they are not freely traded
    on an exchange, AFAIK.