What am I doing?

Discussion in 'Options' started by WallStGolfer31, Mar 26, 2006.

  1. WallStGolfer31

    WallStGolfer31 Guest

    My position consist of both the purchase and sale of options at different strikes with the same expiration. It almost always includes shorting the underlying. It's net theta is earning me a nice profit per day due to the depreciation of the short leg of the spread. Did I mention the the underlying price movement has almost no effect on my net return?

    What am I setting up?
  2. No idea, but it might help to know the strikes and quantities !
  3. WallStGolfer31

    WallStGolfer31 Guest

    The Stock, XYZ, is at $60.85

    The calls expire in 25 days

    I buy 65, XYZ $60 calls at 1.79

    I sell, 123, XYZ $65 calls at 0.29

    and I short 2280 shares of XYZ

    Does that help? :)
  4. Roughly a 2 by 1 ratio write for $ 5.2k debit. Short the underlying, but no clue as to why.

    Some sort of riddle me thinks ?
  5. short stock + long 60 calls looks like delta neutral , so you basically short 123 naked calls . What happens if price goes to 70 ?
  6. I'm sure it'll dissect into numerous other spreads.

    Not sure what his point / question / riddle is ?
  7. Without the short stock, that would be called a ratio spread or backspread.

  8. What are you setting up? Your screen name will become WallStCaddy if that company gets a buy-out offer!

  9. Short stock + long 60 calls, isn't like having long puts?
  10. cnms2


    If you replace the short stock with its synthetic (-call+put) you'll get a straddle plus a pretty large 60/65 ratio call spread.

    Why do you want to open this position? What's the underlying?
    #10     Mar 26, 2006