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Hope it helps.
Long underlying is always higher than any form of theta negative strategy.
could you please elaborate and clarify what you mean here ? thx!
The underlying's chances of going up or down are wrapped around 50/50.
Let's consider directly at the money options for simplicity. Since all non-expired ATM options have extrinsic premium, the underlying's price must rise above (or below for puts) the B/E value given by that extrinsic premium in order to profit. Since there must be some nonzero chance that the underlying finishes between the strike and B/E, the option's probability of profit must be less than 50%.
Theta is just the measure of expected extrinsic (time) premium decay per day, having negative theta just means your position is net long extrinsic premium.I think you've really nailed it with the second bolded quote. Other people might not see it that way, particularly OTM call buyers. In the (unlikely) case of underlying --> moon, the long call always outperforms everything else.
same question here could you please clarify ? what is your metric to say that something out(under) performs ?
The long call provides the highest expected return.Does underlying + Put k normally have the same risk profile as call k? Yes!
Is one of them therefore mispriced? Yes! (only time will tell; both could certainly be mispriced as well)
the mispricing here is clear because you can replicate the exact same risk profile for cheaper using the decorated put. If you could borrow BTC to build a position you could even reproduce the outright call to achieve the exact same leverage.
But this is the essence of the matter. People don't loan you BTC for free.It should not go unnoticed that general sentiment in the XMR community is very bullish. Given normal put/call parity, long call is a superior position to married put.
same question as before, what is your criteria to say something is higher/lower, just leverage ?
Yes. Also, in regular trading, it costs less in fees (by extension, selling a put is superior to a covered call).Risto is making people pay, which is his prerogative. With how bullish (some) people are, I'd even go as far to argue that it's more about long leverage than anything else. From that perspective, the XMR + Put position is actually the worst of them all.
for leverage metric yes, but again if you could borrow BTC the same leverage could be achieved.
Same as above. I think you're underestimating the value of leverage.Contrarily, if you're just expecting lots of volatility (relative to IV of the put you'd be buying), then XMR + Put is the best position available (long straddle/strangle could be argued as well depending on your upside bias/vol expectation).
(I think you probably understand these things already, but others may not.)
not sure i understand this last statement, could you please elaborate a bit ? thx!
If you think the IV (implied volatility) of the puts is lower than realized volatility will be (but that the calls' IV is on the mark or too high), you should go long XMR + Put. Note you must still have a bullish bias as you won't make any money on the downside. You could overhedge with puts and create some position you're comfortable with.
If you're confused as to strangles and/or straddles, a straddle is the purchase or sale of a call and a put at the same strike, while a strangle is the purchase or sale of a call and a put at different (usually both out of the money) strike. If you felt that call IV was way too low, you should just buy straddles/strangles.