Yes, there is no free lunch. That is why trading options is such a tough game, most everything is already priced in. Though we have different objectives trading options, some to hedge, some to make market and some to speculate, none of us likes to pay for the other's yachts and our counter parties are some of the brightest/sharpest minds around the world.
IC,if you are patient/disciplined you will find that the market may not serve a free lunch,but it definetly offers some ridiculously dirt cheap lunches...Thexqueation is,can you recognize it when presented.. You need to forget about your counter parties IQ..Its meaningless,and it's not you are trading exotics in a vacuum against Goldman.. IMHI,the bottom line is you need to understand spreads,and if you don't,you better be a very good disciplined directional trader P.s. When it comes to vol,do you believe in mean reversion?If not,what's your feeling?