OptionOriented
Registered: Oct 2009
Posts: 5 |
11-04-09 05:36 PM
SPX (June 2011)
500-600 Call Spread (short, collect prem)
1,500- 1,400 Put Spread (short, collect prem)
Bid 185.70
Mid 195.65
Ask 205.60
Assuming both legs end up ITM. At the Mid, represents interest of 3.53% for the 227 days to expiry. Way too high, a box spread would be much better. (Recently entered a Dec-11 box at <1.4% APR - beats paying margin interest!)
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.
One could go further OTM on one leg, or both legs to get more $$. Depending upon whether one felt comfortable making a directional bet. (i.e. very DITM call side, and OTM slightly on the put side, still could collect 25-40% excess premium waging the market goes up from here.)
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