What is the optimal time frame for an option buyer?

Discussion in 'Options' started by inandlong, Sep 11, 2002.

  1. Trajan


    you are better off shorting a stock rather than creating a synthetic short using options. Dividends and interest are calculated into the option already. If could leg into it for better prices, it is a possible scenario. The spread is typically too wide for non-MMs to do.
    #11     Sep 11, 2002
  2. Depends; typically is a big assumption ...
    #12     Sep 11, 2002
  3. metoox has 1332 posts and probably no more than 2000 words combined on these posts. :D

    Fortunately for Baron and the rest of you there are guys like him to balance my verbosity.

    As to the variables I am trying to avoid, which become factored in to the price of the options, the moves I am looking for usually last 0.5 -2 months. If I use 3-4 month expirations, that should minimize the theta. With theta minimized, and a point for point appreciation in the position, do I care whether the interest and dividends are in the price of the options?

    Which brings up another point. Does the synthetic short move 1 to 1 with the underlying?

    Now metoox, I know you could answer that with a maximum of two words..."it depends", and more likely with one word, "yes, no, or sometimes". But would you please, most generously and graciously, expand on the answer somewhat?

    Thanks gang!
    #13     Sep 11, 2002
  4. With the scenario that Trajan laid out with the spread too wide and not legging the position; I would short the stock.

    However, we leg everything; and if you are so equipped to scan the entire chain in real time to find the scenario where you are not giving up the edge, i.e. the bid/ask spread is too wide; I would do the synthetic.
    #14     Sep 11, 2002
  5. Sort of ...
    #15     Sep 11, 2002
  6. "Sort of" :D :D :D

    That is hilarious! Clearly you are a mind to be respected.

    Thanks for the previous reply too. I do have the real-time capability to view the entire chain as you say. I will spend some time studying what you suggested.

    ..... I'm still laughing.
    #16     Sep 11, 2002
  7. mgkrebs


    You could have said "maybe" and saved a word.
    #17     Sep 11, 2002
  8. Did not mean maybe; meant sort of.

    Very different concepts.

    Accuracy counts ...
    #18     Sep 11, 2002
  9. mgkrebs


    corrected I stand. (what about kind of sort of?)
    #19     Sep 12, 2002
  10. Options only sort of do what they are supposed to ...
    #20     Sep 12, 2002