The Use of Options as an Alternative for Short Selling and Recommendations for the Turkish Capital Marke

Mine Aksoy and Engin Kurun
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Mine Aksoy: Yalova University
Engin Kurun: Ziraat Portföy

Journal of Finance Letters (Maliye ve Finans Yazıları), 2012, vol. 27, issue 94, 43-68

Abstract: Put options and short sales are simultaneously substitutes and complements. Short sellers can instead buy put options. But a willingness to write put options can depend on the ability to hedge by shorting stock. Strategies by using short selling/stock borrowing with or without option contracts are presented in this article and their payoff stuctures are compared with each other. It is observed that naked positions produced large losses while the covered call/put option positions minimized the potential losses. Exchange traded options will become the popular instruments in this context. They will be start to trade in the very near future and some recommendations are presented here for the efficient options and stock lending/ borrowing market.

Keywords: Short selling; stock; lending; option (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:acc:malfin:v:27:y:2012:i:94:p:43-68

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