Sorry guys...I'm just having a really hard time understanding why anyone would ever put on a reverse collar (no offense Eliot) They just make no sense or seem to offer ANY advantage over the synthetic equivalent.
I've read thru this thread and I haven't found a single good reason why would you wanna trade a reverse collar instead of a simple vertical!? 4Q, You say you like to short a stock and buy a call...well, just buy a put then! Same thing with less commissions.
Bob, this is the same issue I mentioned in my earlier post (and also referred to by richard rimes and now MTE). The problem here is that ET posters generally agree that a collar or reverse collar is NOT superior to the synthetic - that is why we had the flaming at optionetics, lol. This is also why you're not getting a lot of responses to your posts here - noone sees any advantages. You can gamma scalp the synthetic just as well as you can the real position. I do like following your aapl example though - interesting case study. Sorry if I sound a bit negative. All the best. daddy's boy
It's a FACT that a collar or reverse collar is NOT superior to the synthetic. No need to agree or disagree, unless of course you work for optionetics.
Hi gang. I really do appreciate each and every responses. To those who aren't comfortable with this and would rather do verticals. Great. One should never do any kind of financial transaction they're not comfortable with. Regarding verticals, I've done more than my share of them over the years. My experience has been that they are directional and very difficult to adjust. If I'm missing something I would very much appreciate it if someone here would make the effort to show how a bullish vertical could easily be converted to either delta neutral or delta negative in one or two steps. Matter of fact I am presently experimenting with doing the following: Bull Call Spread, coupled with shorting just enough stock to offset the positive deltas created. At this stage of the game what I have is very preliminary and I don't have the foggiest idea if it will work. I am presently doing analysis using an in the money long call and an at the money short call. A purely academic example would be: 1. Long 1 AAPL Jan $80C 2. Short 1 AAPL Jan $85C Assuming the net of 1 and 2 would be 35 deltas, I would then short 35 shares of AAPL. Again, I appreciate the responses especially those who don't agree with my views and theories. But rather than simply reproducing something I say in quote form and then following it up with one or two sentences, I think what we would all benefit if you would further delineate your dissent. 4Q.
No disagreement from me, lol. But Bob is trading the reverse collar because he believes that it provides superior gamma scalping and other adjustment opportunities - otherwise he would simply trade the vertical or long put. Please correct me here if I'm wrong . daddy's boy
MTE, as I have previously stated, my only relationship with Optionetics is that I presently subscribe to their Platinum computer service and my subscription is on a monthly basis. I am NOT affiliated with them in any way, shape, or form. I have never been and have no intention to ever be in the future. I take intense pride in my independence and my ability to think for myself. I also respect and always consider the views of others and do my best to learn as much as possible from those who don't agree with me. If there is an Optionetics way, an ET way, or any other commercially motivated way, I am not aware of it. Thanks and have a great day. 4Q
Sure. Bullish prognosis so go long 80/85 aapl feb call spread. aapl falls to 75. prognosis now bearish. adjustment: sell the 75/85 call spread, i.e. buy back the short 85 and sell the 75. result is a 75/80 bear call spread or, as you like to put it Bob, 'delta negative'. Easy, took just one spread order to modify the position. daddy's boy
4Q, Not to start this synthetics argument again, but a collar is exactly the same as a vertical so you can't say that a vertical is directional. I mean, it can be as directional/directionaless as you want it to be, same goes for a collar. A vertical cannot be more difficult to adjust cause any collar adjustment can be used to adjust a vertical. The two are synthetic equivalents and all the possible option/stock combination adjustments have equivalent synthetic positions, which means that any adjustment that works for a collar will work for a vertical.
4Q, I didn't imply that you use the optionetics way or that you are affiliated with them. It was just a poke at the recent synthetics argument that took place there and was not directed at you. Sorry!