What am I doing?

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?

 

No idea, but it might help to know the strikes and quantities !

 

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?

 

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 ?

 

short stock + long 60 calls looks like delta neutral , so you basically short 123 naked calls . What happens if price goes to 70 ?

 

I'm sure it'll dissect into numerous other spreads.

Not sure what his point / question / riddle is ?

 

Without the short stock, that would be called a ratio spread or backspread.

 

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

 

Short stock + long 60 calls, isn't like having long puts?

 

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?