Hi, is there a way to create a position that acts like being long 100 shares, but for only 10 points in either direction, then stops gaining or losing? I wanted options that are about a year out. I know I can create a spread that does this at expiration by buying a call vertical, and selling a put vertical, but with 1 year options, if the price moves in the short term, there is little change in the spread value. I wanted something that has 100 delta in the short term, but at 1 year later has a capped gain or loss of 10 points. Is this possible with any method or trading product? Thanks
A 10 point gyration on a year out delta neutral spread? …The bid/ask spread alone is going to cripple the whole thing……IMO
Another (undoubtedly unhelpful) thought: There are only 4 ways to do options -- a 2x2 square of long and short, against puts and calls. Seriously. Anything beyond that theme is variation. (It's great music, but still...) DRAW THE PROFIT/RISK GRAPHS for each, and then, like a jigsaw, put together what you wish to do. DO NOT make this trade without knowing ahead of time *exactly* what happens, now, and later, should it go up, should it go down, should it camp out. I don't mean to sound pedantic, but ...... your question is a mite scary. Like, "If I go out playing in traffic, but look to my left the whole time, will I be okay?" Sure, kid; knock yourself out.
Not with listed options. What would come close is that 10 point spread going out 1 year, but buying more of them. eg, if the calls spread has a 50 delta, buy twice as many. That way if you want a delta of 100 shares, buy 2 spreads.