HOLLYWOOD STOCK EXCHANGE
THE ENTERTAINMENT MARKET
THE ENTERTAINMENT MARKET
It is a way to make 2 bets at the same time.....
MOVIE has a strike of 20. You think that it will do more than 22 (20 plus the 2 to purchase) so you buy the call. Using a little logic, if you think it will do more than 22, then it definitely will not do less than 18 (20-2) so you short the put and you hope your initial gut instinct is correct.
You may want to keep an eye on the underlying price of the stock. 20 weekend usually means a price of 54, so you may keep that number in mnd.
On the other side of the coin, you may say, "No way it does 18 this weekend. This turkey will be lucky to nake that much" and the price is way under the 54, so you long the PUT. By following logic, if it is going to do less than 18 to justify the purchase of the Put, then that means it would not make the 22 that the call implies, so you short the Call.
There are those who criticize me for this logic, but after almost 11 years of gut feelings, I can say that a combination of Long Put, Short Call or Long Call and Short Put make sense.
Occasionally, a double short would have been the play (if the weekend is between 18 and 22 in ths example) but double short is rare. I do not believe in the double long play as you are guaranteeing that one of them is always wrong, returning zero.
Shorting Puts vs. Buying Calls Jul 12, 13:34
this makes my brain hurt {nm} Jul 13, 09:46
It is a way to make 2 bets at the same time..... Jul 12, 14:06
Great insight on two great players.. THanks {nm} Jul 12, 20:52
In my experience, the higher the strike price, the more worthwhile the double long strategy Jul 13, 04:54
Thats true. Hasn't been a lot of play on some of these {nm} Jul 13, 09:13
Is there some sort of guide I need to be reading for call and put strategy? {nm} Jul 13, 09:47
There ARE differences between shorting a put and buying/longing a call.... Aug 01, 18:16
