Can any /biz/ anons solve this?

[Anonymous No.15638851]

I'm thinking about investing in one of two portfolios.
Portfolio A consists of a long put option with a strike price of X and a share of the stock that the put belongs to.
Portfolio B consists of a long call option with a strike price of X and a bond that pays X at time 1.

Which portfolio should you invest in?

[Anonymous No.15639023]

>>15638851
Portfolio C (rypto)

[Anonymous No.15639051]

>>15638851
Porfolio C is holding chainlink to 10K

[Anonymous No.15639056]

>>15639023
This

[Anonymous No.15639179]

>>15638851
What's the volatility of the stock in A, and what is the bond in B?

In theory, A is a lossless situation, since you're buying the right to sell the stock at the price you bought it. But when you factor in the cost of the option and the commission on both ends of the trade, it only works if the stock has a high enough volatility to cover the costs.

Option B will probably profit you more, but it has no downside risk.

Though you will probably never have a chance to do it, in a perfect world you would do either a conversion (+u +p -c) or a reversal (-u -p +c).

That's the closet you're going to get to a sure thing.

[Anonymous No.15639205]

>>15638851
damn and i thought the link posts were nonsensical

[Anonymous No.15639283]

>>15639179
Should have read...
> Option B will probably profit you more, but it has no downside risk protection

[Anonymous No.15640203]

I think OP making a "joke".

Both portfolios should be the same value according to Put-Call Parity: https://www.investopedia.com/terms/p/putcallparity.asp

[Anonymous No.15640346]

>>15640203
Another to think about this is to look at the Protective Put Diagram.

Both portfolios result in the same Pay-off diagram. And so, all else ignored, you'd choose the one which is "cheapest", if they don't have the same initial cost.

[Anonymous No.15640770]

>>15640203
Op here, pretty much nailed it.
Wanted to see if anyone browsing this board knew basic finance