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.
metoox has 1332 posts and probably no more than 2000 words combined on these posts. 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!
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.
"Sort of" 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.