Writing deep in the money calls is better than short selling because:
Options:
- when writing calls, time value is included which erodes
- no stamp duty on options
- no div to pay
- may not need to close position at all
- can effectively short a million shares without affecting price
- low brokerage
Short selling:
- need to pay div to holder
- need to pay interest
- need to pay stamp duty in and out
- brokerage is high
- must exit trade eventually
- dumping shares causes price to fall
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Shorting vs Writing calls
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