Pay More, Profit More by Vikram Murarka
ARTICLE SYNOPSIS ...Pay More, Profit More by Vikram Murarka
Paying a higher premium may mean an
opportunity for greater profits. Look at this
example of the GBP/USD trade.
It is an open secret that every corporate
hedger wants to pay zero for an option that he buys. Banks oblige by
constructing "zero-cost" strategies. The
concept of zero-cost structures has become
so ingrained in the market psyche that when,
at a seminar, we suggested buying call
spreads at a cost, an experienced hedger
asked, "But aren't call spreads supposed to
be zero cost?" No!
Like anyone else, we would love to be able to buy cheap option...