Advanced Micro Devices Inc (AMD)

[alan81]

From your example...
I think it illustrates the error in your thought process. You mention using both put and call options priced at $0.75 with a strike price at the current stock price. To get the same option cost for the same strike price requires that the stock not appreciate over time, which means it is getting zero average return. In reality, on average the stock appreciates over time, resulting in the cost of the call being greater than the cost of the put. Check out almost any heavily traded options and you will notice this. This is what I meant by the cost of the options are slightly adjusted to "make up" for the average x%/ year gain of the stock.

Are you arguing that my assumption that stocks on average appreciate?

As you mentioned, with your strategy you could, with no capital whatsoever, create infinite wealth by writing these synthetic stock options. Does that really make rational sense to you? Where is the money coming from?
--Alan