AW: [RT] Market ESZ0

[MikeSuesserott@xxxxxxxxxxx]

Hello 
Gitanshu,
thanks for your interesting 
and instructive posts which I always look forward to reading.I have 
one question regarding these synthetic long straddles that you often recommend 
(buy OTM call, sell half as much stock or futures). I'm wondering where you see 
an advantage as compared to the purchase of a straddle (buy call, buy put). Let 
us compare, using last night's EOD prices. QQQ was at 77 
3/8.
Here 
is Position-1 showing long 10 QQQ Dec 80 Calls, short 500 
QQQ:
<IMG 
 
Now this would be Position-2, 
long 5 Dec QQQ 75 Calls and Puts each (long straddle):
<IMG 
Max risk, time decay, deltas 
and gammas etc. are approximately the same for both positions - not 
completely the same, because there is no fixed strike price for the 
underlying, but close.
However, capital commitment 
for Position-1 is $ 23,463.00 (short sale margin + option 
premium), but only $ 5,190.00 (premium) for 
Position-2.
Why should I go for a position 
that requires four times the capital outlay?
Kind 
regards,
Michael 
Suesserott






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