Collars with Same Strike?

Discussion in 'Options' started by LaxFan, Oct 2, 2022.

  1. LaxFan


    1. Is it possible/allowed to have a collar with same strike price? Occasionally, I've noticed some options with calls being more expensive than puts.

    Example: XYZ trading at 50.35; Buy 100 shares, Buy 1 Put, and Sell 1 covered call; earn .50 credit.

    XYZ 50 Put 1.50
    XYX 50 Call 2.00

    If stock below 50 at expiration, exercise the put; profit= +2.00 -1.50 -.35 (loss on stock) = .15
    If stock is above 50, stock is called at away and sold at 50, profit = profit= +2.00 -1.50 -.35 (loss on stock) = .15

    Am I missing something here?

    2. How would you find stocks with call options selling for more than puts?
  2. Robert Morse

    Robert Morse Sponsor

    This is a conversion. You have to include the cost of interest carry and dividends. You are locking up that net cash of 49.85 for how many days? One month at 5% is about $0.205.
  3. Perhaps you should review the concept of moneyness. A good half of the calls on the option chain are more expensive than same-strike puts; this should not be a surprise to anyone who knows even the basics of options. E.g., in your example, the 50C is ITM by 0.35, so it has that much intrinsic value - while the 50P is OTM and has an intrinsic value of 0. The further ITM you go on the call side (with a corresponding rise in intrinsic), the further OTM you are on the put side, and the greater the price difference in favor of calls.
    Last edited: Oct 2, 2022
  4. If both strikes are equal then the result is a constant, either positive or negative or 0.
    In this case +0.15, regardless of the price of the underlying at expiration, as can be read from this P/L diagram:
    In such positive cases one can call it an arbitrage, IMO.

    By using an options scanner/screener :) that scans all or a subset of the options of a watchlist of tickers; ie. by using some scan filters...
    There are some online scanners, see for example that of YahooFinance.
    But it seems the option scanner there no longer exist; it was under this link I think

    Here's such a scanner, but I'm not sure if it's possible to search for the criteria you are interested in:

    Best is, write your own scanner :D, if possible. You need to get the data and write the scanner program, or find someone who does it for you.
    I can write a scanner for you if you can afford 10 grands :), takes about 2 to 3 weeks, but don't expect any comfortable GUI b/c it's just output to files and the console :).Of course you also have to pay the data vendor (recurring monthly payments depending on data volume and age/frequency of the data you need).
    Last edited: Oct 3, 2022