Ladies and gentlemen, For example CL is at 90. I buy 2 CL puts at 90 and 1 CL futures contract. Will this position be identical to the following positions: buy 1 CL put at 90 and 1 CL call at 90. sell 1 CL futures and buy 2 calls at 90. Thanks.
Obviously not identical, they're equivalent. The straddle will have different capital reqs. and costs from the synthetic.
1) The option(s) will expire before the futures. 2) The futures should have a tighter bid-ask spread than the options. 3) To be "long" futures is to be long a call-option AND short a put-option at the same strike price......and vice versa. 4) You can save some fees by doing the "traditional" straddle, i.e. 1 put and 1 call, instead of the "synthetic" straddle, i.e. 1 futures and 2 options. :eek:
go over synthetic replication on this page.. http://www.theoptionsguide.com/long-put-synthetic-straddle.aspx each leg of every trade has a liquidity factor and margin req that needs to be consider as part of the risk reward..
Yes I know that it may have different bid/ask spreads, margin reqs, commissions, etc. What I meant is how the positions may behave in regards of profit/loss. Taking into account time decay, IV change. Could it be better to use underlying as one side of the straddle or it is all the same thing.
No. They are the same thing except for interest rates, dividends and carry costs. No dividends in oil but implied carrying costs. This is all priced into the options as well, so you only see a difference if you can actually find better or worse than the market does. Generally you will fund worse.