The call time spread is worth more than the same-strike put spread. You had proposed that a decrease in spot, coupled with an increase in vol would result in greater put spread value compared to the same-strike call spread.
yes,thats what i thought.but if the put spread is more cheap....i always buy the cheaper one,its a nonsense to buy the more expensive one,do you agree? even i wrote about that-before betting,first to check the prise of both spreads and buy the cheaper one.... as you see,the gain is bigger,and the percentage gain is even bigger-just for a couple days...... now i really want to ask you all something: how come the founder of this tread ,who doesnt have a lot of experience,ectually is betting right by buing ITM calls,and all the forum "experienced" traders are telling him that he is wrong???????? did you learn something new today,and for a begginer? will you buy any more OTM calendars,or first you will check if the ITM are cheaper? this is a perfect case of negative empiricism...sorry, i am more interested in nassim taleb's theories-thats what i was looking for......and right here we have a prove.....
My post is simply addressing your supposition that a put spread results in a superior trade over the same strike call spread when the underlying falls and vol increases.
i was wrong about that....its just a theory,which is disproved from your play.... from over a year i am looking in books about why these syntetics move differently and never found anybody who tried to explain.only in one book i found ,that you should always check which is cheaper......but i already knew that..... for a long time i tried to explain it to myself,cause i really hate unexplanable things ........ and i find 2 different reasons: 1.because they are the same,the prise difference can be only a product of IV change.for me the cost of option is not the premium,i think its the IV prising in it. so the prize discovery difference should be some kind of IV relation 2.the other reason for that is that MM are too friendly to us and give us a huge opportunnities...... but the second reason somekind doesnt fly to me as much as the first one.......
has anyone considered the fact that the calender call is cheaper, because more people play the put side because they are protecting their stock positions Sept-Oct Call $21 +DOWIY 0.80 0.90 S 0.95 0.55 413 6,160 +DOWJY 1.35 1.45 S 1.45 0.50 258 843 price 55c 55c 50c Sept-Oct Put $21 +DOWUY 0.55 0.60 S 0.55 -0.75 114 9,116 +DOWVY 1.20 1.30 S 1.20 -0.75 88 703 price 65c 70c 65c price diffence 10c 15c 15c 18% cheaper to 27% cheaper
It's not about more people playing the puts, it's the dividend. DOW pays a dividend at the end of September, which makes the puts more expensive.
thebubs,a lot of times,the put spread is cheaper.....today i was buying oil calendars-the put was 1,300$,the call 1,850$.....there's 50 cent contango between the futures,but still. you just have to check everytime which is cheaper and buy it. take to consideration also,that if they are cose prize,better to buy OTM one,because bid/ask is smaller always in OTM spreads,than ITM-people trade more OTM,than ITM options-so better liquidity in OTM
acen, that makes sense always buy the cheaper, do that in any area of life, with same quality of course. I get that the dividend makes the calls cheaper if the dividend date is during the spread, but my question is the following. Why, how does the dividend make any diffrence when playing options, you dont get the dividend so why does it matter when the dividend is, are you assuming the stock will go up in price during the dividend period. Not trying to be argumentative but really dont understand why it is important in the option world. May seem like a newbie question but oh well