Risk Reversal Question

Discussion in 'Options' started by LaxFan, Mar 12, 2023.

  1. destriero

    destriero


    IOW, you would capture more skew (larger credit) if the trade were d-neutral here.
     
    #11     Mar 20, 2023
  2. weij

    weij

    If stock sells off, his short put would make him buy stock at the low price, which is what he expected ("put to you at 235"). Basically his original thought is fine, only missed that his loss can be higher than that, as I pointed out in my previous reply
     
    #12     Mar 20, 2023