You know how to solve this problem?

Discussion in 'Options' started by clarodina, Nov 26, 2012.

  1. A call option price is 1.6 and B call option price is 1.0.

    Both A and B are different products and A price is only avail on 1600 and B price is only avail on 1800.

    Long 100 contracts of A and short 100 contracts of B at 1.6 and 1.0 repsectively. The ratio is 1.6. THe problem : How to maintain the ratio of 1.6 the next day when prices move? A price is avail before B and say A price fall and you choose to long more but you don't know B price which is 2hrs less on 1600. Say you long addition 1000 dollar for A. When B price on 1800 short 100 dollar for B would not make the ratio equal to 1.6. Using different dollar would make the ratio equal but the dollar exposure would be different. Anyone?
     
  2. My motto is "you can't have your cake and eat it too". Perhaps you could think about that for awhile.




    :)
     
  3. Are u sure you calculate ratio correctly? I say the ratio should be determined by the dollar amount of the underlying stocks ( stock price * 100 contracts).
     
  4. both are 100 contracts

    your formula gives 1.6
     
  5. Do you attend NYU or Columbia? :confused: