kyle field 94 said:
I trade options on fidelity and curious if anyone knows if I can trade the following, and if so how?
Background: I bought 10 $6call options of a stock when it was around $6. I also sold 10 6$ put options. Net premium was flat. Stock is now trading around $ 7.50, and options are may 15 expiring
1. I would like to sells some calls and buy back puts on a $$ basis, and not on a per share basis. I would put in an order to sell 1 call and buy back 10 puts at a net zero premium. Can and how do I do that?
2. I would like to sell a 1 $6 call and use that premium to buy 1 $7 call and buy 1 $8 call at net flat premium. Can and how do I do that?
Buying a call and selling a put is a synthetic long position. For options at the same expiration and same strike, you got positive delta on the calls and positive delta on the outs (delta of a put is negative, and since you sold them, that makes it positive).
And the difference in delta between a call and a put is 1.00. Hence, a synthetic long position, i.e. a $1 move kn the underlying equates to a $1 move per share in your position.
It is however, a leveraged position since the premium you paid for the call, less the premium received for the put plus the cash required to sell the put is less than the price of the underlying.
I think its key to understand what your positions actually mean and how they will behave, then you can decide what actions fit with your beliefs and risk tolerance.