Arb Opportunity with chesapeke?

Discussion in 'Options' started by Nutinsider, Jul 23, 2013.

  1. Hey guys, havent been here in a while, been out of town a lot lately.
    Hope all is well.

    Quick question.

    Would love to know you thoughts on this message a friend sent me:

    "Buy the Aug 17 calls with 24 strike in CHK Sell the Aug 17 puts with 22 strike you profit the difference if no movement 22-24 in stock. If stock fall below 22 you give up your profit or take position in good stock. If above 24.20 you making mad money my friend. Three reasons to own it, Carl Icahn, Nat Gas prices rising, Insider Buying huge in past month."

    thank ya
  2. Re NG prices rising, some see it differently. I would look into the correlation between NG prices and stock price and decide accordingly. Good luck!
  3. thats a risk reversal, and in no way an arb, just fyi
  4. Butterball


    This is not arbitrage. Your friend is a snakeoil salesman. Tell him I have some "good" stock to sell to him.
  5. He is not a broker or anything like that. Thanks all for the info.
  6. If the stock tanks, it's like you're buying stock for $21.50 with all the loss associated with that.

    If the stock goes up, you need quite a move for the 24 calls to really pay off.

    In the middle, you make maybe $.50; and I can think of plenty of other ways of making $0.50 without the risk of the stock.