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Given an index X and a separate index Y where the value of X is about 10 times the value of Y, is a put on on X the same as 10 puts on Y at the same delta?
For the index X, are 3 puts at 1 delta the same as 1 put at 3 delta?
When aiming for consistent return, if it more safe to have more puts at lower delta or less puts at a higher delta as volatility decreases?
Given an index X and a separate index Y where the value of X is about 10 times the value of Y, is a put on on X the same as 10 puts on Y at the same delta?
Yes!
For the index X, are 3 puts at 1 delta the same as 1 put at 3 delta?
No! 1 put at 3-D is not as far out of the money as the 1-D puts. So, you trade off the probability of a loss with the magnitude of a loss. 1 put with 3D loses more often but not as severely as the 3 puts at 1-D. There is no correct answer, you have to pick whatever you are comfortable with.
Given an index X and a separate index Y where the value of X is about 10 times the value of Y, is a put on on X the same as 10 puts on Y at the same delta?
Yes!
RUT is about 1/2 of SPX and the premium for RUT options is about 1/2 as for SPX. When a loss does occur on the other hand, will it be double the magnitude on SPX so total loss is similar to the two contracts loss on RUT?
Are all things well balanced/no free lunch in options trading?
Why do you trade 10 SPX contracts and not 2-3 NDX contracts?
@norciom Correct, there's no free lunch.
I trade SPX because it's the most liquid and the S&P 500 is a broader index.
Given an index X and a separate index Y where the value of X is about 10 times the value of Y, is a put on on X the same as 10 puts on Y at the same delta?
Yes!
I think this is only true if the IVs are the same (and assuming deltas and DTE are the same). Here is an interesting piece expanding on this idea.
https://www.tastytrade.com/shows/market-measures/episodes/comparing-strategy-risk-08-13-2021
Indexes are more apples to apples than an index vs stock, but the IV is still important in my opinion. The NDX is more volatile than the SPX for example.