DrvTrader
Registered: Nov 2009
Posts: 1 |
11-07-09 07:20 AM
Quote from OptionOriented:
Odd thing about the DITM IC is my broker only requires 10k as collateral! Theoretically, one could pocket the ~9.5k (margin) and invest (~19k) in some stock - MLPs?! Take in dividends (5-7.5%) and actually end up with more than the 20k to cover the SPX position.
If this is true, i.e. 10k margin, could this be an infinite loop??
i.e. start with 10k in ur account. Take the IC, now u have 19k cash. Take a second IC, use 10k, now u have 27k cash. Do it a third time and u have 36k. Now invest this safely in an instrument which will cover ur cost of ITM expiry for the financing IC and then some! Am I missing something here or can I end up with a million dollars in my account if i keep this up!! 
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