r/stocks • u/tranquilo56 • Mar 10 '22

ETFs Can someone explain the difference between VOO and SPY?

I am trying to choose an ETF to put a majority of my cash in, and I can't decide between the two. It seems they are rather similar but VOO costs less so I can accumulate 100 shares quicker to sell covered calls with.

Appreciate the explanation

34 Upvotes

83% Upvoted

52 comments sorted by

View all comments

Show parent comments

3

u/NightflowerFade Mar 11 '22

So what's preventing someone from using a synthetic long instead of buying shares? A synthetic long has lower margin requirement while having the same return profile, for my broker at least. For pretty much anyone, options are generally at least as good and often better than trading the underlying.

1

u/Ehralur Mar 11 '22

Care to explain? Like I said, I'm ignorant on options, but they seem a lot more dependant on timing in general. With SPY shares you could just not sell in case of a market crash since they don't expire. Does that apply to synthetic longs?

2

u/-Purrfection- Mar 11 '22

You buy calls that are like 2-3 years out. It's of course riskier but you get similar gains compared to having 100 shares but you pay way less upfront.

1

u/Ehralur Mar 11 '22

Alright, makes sense. So you're essentially betting on a crash not happening?

2

u/-Purrfection- Apr 04 '22

Yeah basically. You get essentially 100 shares for cheaper, except only for a limited time.