(almost) riskless strategy ?

Discussion in 'Options' started by kiwi1, Aug 20, 2010.

  1. kiwi1

    kiwi1

    Someone said reallife optionchains dont have any profitable trades or asked for specific examples

    how about this for example:

    SPY sep2010 (85/95) put spread now is at credit .30 (0.41 - 0.11)

    100 verticals like that = margin 100K
    for 3K return over four weeks.
    commission is a couple hundred.
    return/margin at aprox 3% per mon.

    Aprox odds of underlying touching(expiring) in dangerzone is less then 10%(5%)

    This was first random that I looked up - I think we can do better if we try to look harder and play around.

    I understand the concept of picking pennies before the steamroller...
    but somehow seems like there is a bunch of free money on the road
     
    #21     Aug 22, 2010
  2. I assume you are referring to me.


    You have missed a small detail. Go back and read this thread, and see where your trade fits into this discussion. You get a F for your post.


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    #22     Aug 22, 2010
  3. MTE

    MTE

    No such thing as free money! Think otherwise and you are setting yourself up for a very nasty surprise one day.
     
    #23     Aug 22, 2010
  4. kiwi1

    kiwi1

    Do you mean not deep enough?
     
    #24     Aug 22, 2010

  5. You are Deep OTM ...... Try Deep ITM (calls or puts).

    I get the feeling you forgot about mentioning a DeepITM-Put-Spread on some major index underlying in your original post, trade #2.


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    #25     Aug 22, 2010
  6. spindr0

    spindr0

    Be careful. Fomex-Fomex may want to split hairs about whether that spread is ITM or deep ITM. LOL
     
    #26     Aug 22, 2010
  7. +1

    Hard to find advice more sage than this. If you think you've figured out some get rich quick scheme that the mkt completely missed, most likely you need to think again. It's infinitely more likely that you, rather than Mr Mkt, is the sucker.
     
    #27     Aug 22, 2010