Because there is an arb. Buy CBOT seat at $3.1 Million, includes 27,338 shares of BOT plus trading rights (worth about $360k). 27,338 shares of BOT at todays price is worth about $3.6 million, plus trading rights equals almost $4 Million. Profit of $900,000 BOT shares are restricted but, 1/3 are freely tradeable mid-April and the others get released thereafter. One can short the BOT against the Restricted stock if you can post the margin.
theoretically yes. Those shares are hard to borrow, even if you sold 1/3 in the open market, you'd still need to find 18,000 shares to short, highly unlikely. You would also have to find a lessee to recoup trading right revenue. Too much delta exposure would ensue pragmatically. just my 2cents.
I think you can sell the trading rights outright for about $360k. Why do you mention one needs a lessee? I'm trying to analyze this trade so I appreciate your comments. Thanks, Neal.
Ok, I must be mistaken about needing a lessee, I was unaware that you could sell rights, but continue to own the seat. After further review, this may be a worthwhile endeavor. There are 770,000 short interest shares, 23% of float, which makes finding short shares more plausible. Neal, I am far from an authority on this subject, but it looks like you may be on to something. GL!
Something's wrong here. What CBOT member is going to sell their seat and give up a 500k arb? You can't even get a tick or two out of most of these guys without being lucky. Traveler
I agree with both Traveler and Mrmoose, I think. I'm looking into the legality but I think you are correct.