This results in a cheaper setup than the opposing call ZEBRA. If I’m placing a put ZEBRA, I won’t have to slide my options deep ITM at all to remove the extrinsic value, since an ITM long put option will have a similar extrinsic value as the same strike OTM call option. If I’m placing a call ZEBRA, I’m going to have to slide my options deeper ITM to remove extrinsic value from the trade, which will result in a more expensive setup. Both of these options are 5 points OTM, but the put is trading for almost twice the extrinsic value. This means that OTM puts trade for much more than equidistant OTM calls: Example of Option Skew on the tastytrade platformĪs you can see in the example above, you can see that the 447 put is trading for around $2.71, where the 457 call is only trading for $1.41. In SPY, there is put skew, since SPY markets tend to grind higher and crash down. SKEW represents a difference in extrinsic value with equidistant OTM options and tells us where the market perceives a potential high velocity move to be. It’s important to note that SKEW will affect the entry price of the ZEBRA since we are working with extrinsic value in the options we’re trading. Also, if the stock doesn’t move at all, we still lose that $500 over time as extrinsic value decays to zero. If our ZEBRA slides deeper ITM on a directional move in our favor and we paid $500 in extrinsic value on the setup because we wanted a cheaper trader, we would lose that $500 in extrinsic value as we slide deeper ITM and it would dampen our profit potential. When we do this, we get as close to 100 deltas as possible, and we don’t limit ourselves in profitability if we are directionally right. When setting up a ZEBRA, we want to focus on the most important aspect of the trade - removing extrinsic value from the equation. With the ZEBRA, we have no extrinsic value to lose if the trade is set up correctly, which is why the delta is much closer to 100. On a rally, the put option will lose value, which temporarily eats away at our profit on the 100 shares of stock. The difference here is that we are paying $2.34 in extrinsic value for that protection, and that means if the stock doesn’t move we are losing that value.Īdditionally, the delta is significantly lower than 100 at 72.49, because we are paying so much for that long put option. In the married put example above, we are putting up $22,000 to own 100 shares of stock, and we are purchasing the put to protect our risk below 445 just like the ZEBRA example. The problem with this strategy long term is that you are consistently paying extrinsic value to buy the long put, where the call ZEBRA offers a similar risk profile without paying for that extrinsic value cost of the long put itself: Example of Married Put Strategy on tastytrade This results in a stop-loss on your shares below the put strike price, since the long put appreciates in value equivalent to 100 shares of short stock below the strike price at expiration. Net sales are distributed geographically as follows: the United States (31.8%), North America (18.7%), Germany (16.4%), Europe/Middle East/Africa (16.8%), Asia/Pacific (10.5%) and Latin America (5.8%).A married put consists of owning 100 shares of stock and “marrying” that position with a long put below the stock price. Net sales by source of income are divided between sales of products (85%) and sales of services and software (15%).Īt the end of 2022, the group operates 117 production sites worldwide. product information and traceability systems (30%): barcode printers and scanners, card printers, RFID label printers and encoders, printing consumables (thermal transfer labels, receipt paper, ribbons, plastic cards, RFID tags, etc.) and location solutions. visibility and mobility systems (70%): mobile terminals (ruggedized computers, tablets, mobile radio transceivers, RFID readers, point-of-sale systems, interactive kiosks, etc.) Net sales break down by category of products as follows: The products are mainly intended for the distribution, e-commerce, transportation, logistics and healthcare sectors. Zebra Technologies Corporation specialises in the design, manufacture and marketing of automatic identification and data capture technology systems.
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