The point is the underlying value of the options track the stock exactly. The time values will cancel each other out save for maybe a .05 spread. So you 'may' have to pay some additional fixed (not variable!!!) costs for the option vs a stock purchase. If that was your point, you are correct.
Are you arguing that my assumption that stocks on average appreciate?
NO!!! As a put writer I use this fact to my advantage all the time! I'm collecting on it every month! The time value in options would be 0 if the stock never moved. I'm collecting the time value from some poor sap who is buying the put I'm writing and betting against the market!!
As you mentioned, with your strategy you could, with no capital whatsoever, create infinite wealth by writing these synthetic stock options
The strategy I laid out cannot create infinite wealth. You have to have buying power to back the put. You will get assigned the shares if the option expires and the stock is below the strike. You will need the cash to do it.
I write puts and cash ends up in my account seemingly from nowhere. Hey I just had an infinite gain! NO!!! I am backing that write with cash or margin power.
Would you not agree that people buying puts are betting against the trend of upward movement? They are making a short term bet that the stock will go down. 95% of the time they will be wrong, and I'll keep the cash. I'll take that bet anyday.
HailMary
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