Buying US ETFs through call options

Investing / Brokers
21

This is not that different from buying normally and the price dropping shortly thereafter.

If you get assiged via a put, your basis price is the strike price minus the premium received. You always keep the premium.

22

i gladly wait for some realtime data of you guys. I wish you the best of luck ;).

It can work, but it is no free lunch ever.

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23

I don’t understand the strategy behind buying a call option and exercising it straight away ? At the end it will be more expensive than buying the underlying directly on the market since you basically buy the time value of the option on top of its intrinsic value, that is if the underlying costs 100 usd and you buy a call with a strike price of 98, for sure the value of the option will be more than 2. At then en you pay more than 100 to buy the underlying on the market.

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24

Of course there is no free lunch. Selling a put gets you into a short situation. In the worst case you have to buy VT at double the trading price.

@HoiZame
The strategy is only for those who aren’t able to buy US ETFs due to Mifid2/Fidleg regulations. This might affect us to starting in 2022.

25

i guess you have to go over the options trading 101 again :man_student:.

26

Pls elaborate. There are two options to get US ETFs with options:

  1. Buying a call option. (Long)
  2. Selling a put option. (Short)

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27

Selling a put is long. Selling a call is short.

28

worst case you have to pay the strike price for an underlying which is worth (close to) zero (unlikely with vti but possible with certain shares
 [check WDI for example]).

29

No.

Buying a call is long.
Selling a call is short.
Buying a put is long.
Selling a put is short.

30

Selling a put is short on the put option, but it represents a bullish outlook on the underlying.

31

Not really. You can sell a put with a strike above the current trading price. Making sure you get the underlying asset. Without assuming a bullish outlook.

I guess you have to go over the options trading 101 again.

32

you can do it but it does not make much sense.

33

It does if you can’t buy the underlying asset directly due to regulations. Like I said, if we lose access to US ETFs due to Fidleg, we will have 2 ways of buying US ETFs.

  1. Buying a call option with a strike below the trading price. Exercise the right immediately.

  2. Selling a put option with a strike above the trading price which ends on the same day.

34

but if you have no bullish outlook you’d be better of waiting for rising option prices of the put with falling price of the underlying

btw: if you really only use the option to buy the underlying, then you should buy/sell them close or at expiry date.

however, i would not expect FIDLEG to prevent the trade of us etfs (or can you point me to a reliable source for this?). it is more likely in my opinion, that merely active solicitation will be limited.

35

Quick question : If I can’t access VT or whatever kind of fund, wouldnt it be more time efficient and cheaper to just buy the VWRL fund (or other equivalent) ?

36

You lose dividends and get a higher TER, in total close to 0.50%/year less return than VT. This will have a huge impact longterm.

37

you miss out on 15% of the ~2% dividends on the 55% of VT that is made up by US-securities + 14? basis points in cost difference.

So it’s around 0.3% cheaper. If (dividend income - interest)*tax rate is lower than 15% of your dividend, then the difference will become smaller