Clive wrote:Yes - the cost is bid/ask + commissions.
For each asset, If the underlying declines a lot, you end up with the same as if you'd held the underlying - but in concept other holdings would have risen - no different overall to the conventional.
But main reason investors use PP is because of reduction in portfolio volatility it offers
wshang wrote:The other problem arises when the underlying has moved away from your initial position and the gammas are no longer offsetting. This could be especially bad near options expiration when closer option side's extrinsic value is largely gamma and your theta is essentially zero.
Clive wrote:What are you currently doing with your money?
Spending it Thrifty 'til fifty then spend to the end. But not in the 'to consume wastefully' definition manner.
Clive wrote:Being that options are a net-borrowing and lending market, if you buy the Call, you put out money for that call. If you sell the Put, you receive a credit.
You might buy 1 at-the-money (ATM) Call, sell 1 ATM Put, for almost zero premium. It is a way to replace buying a stock by buying a Call and selling a Put for almost zero cost.
Users browsing this forum: arthurdawg, berntson, Bing [Bot], charder, EyeDee, FAST Enterprise [Crawler], harlan247, HomerJ, KenCarylBogle, nfldoc, retiredjg, rnitz, stemikger, William4u, Xyz214 and 78 guests