>> Tibster: Why not build a synthetic short and add some OTM call and puts to cap it? Because I want to buy or sell those options myself :) >>...
Also I need counterparts for my OTC options or there wouldn't be a ground for me to trade those OTC futures (which I use for hedging those options).
>> As long as you're happy with the idea that the prices of the "capped/floored" futures contracts could be different to the vanilla, I am happy...
And if you have capped CFDs, using those as the arbitrage instrument instead of the real stock, then you can also price futures, for which the...
That's why I'm not bothering with futures and just using CFDs. You don't need to price those, they are already priced by the market, at the spot...
That's because regular assumptions about arbitraging a future do no longer hold for capped ones. Let's take the case where interest rate is zero...
I'd have to think about it. By default I'd say that if the interest rate and dividend yield of the underlier is zero, then the risk-free fair...
>> @Martinghoul: I am happy to give you an example, using the underlying of your choosing. I'd like to see your example on the cash-settled OTC...
@Robert Morse: >> I'm trying to keep this simple, because it's very difficult without a real conversation to explain. Yes I work for lightspeed, a...
>> How much are you willing to pay for this "ease of use"? I'd pay just like I do now: commission per trade. Right now with IB I'm paying $5 for...
The pricing of options changes fundamentally but the actual price of around-the-money options stays pretty much the same. Only long tails and the...
There are dozens (actually I suspect thousands) of online brokers out there. They all offer the same product, competing with each other in small...
>> Why is a simple option spread not sufficient for your purposes? It's complicated to use compared to plain capped option and spot instrument...
By the way, I see Robert Morse has some connections with Lightspeed Trading, so maybe he can offer a more "broker" view on these things. Currently...
This capping would greatly increase the liquidity on the long run since it would allow the retail sellers like me to entry the market. I'd also...
This is a perspective of the seller. As a buyer you may have a different perspective, of trying to rip off the other part, but as a buyer I'm...
Say I'm selling you such an OTC option on GM (currently priced at $36.30). It'd be an ATM call, striked at $36 and under the current condition I'd...
>> Do you think it will be free in the pricing of an OTC pair? I'm not referring to OTC strategies which involve several current options. I mean...
I want that cap "for free" by incorporating it in the very definition of the contract. Both for futures and for options. This would effectively...
>> You can "cap a future" buy buying a option on that future. Nope, unless you buy that option for free.
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