On Expiration fridays sell way OTM calls or puts for 1 penny. 10000 contracts will net you 10,000 dollars For example GE strike 13 call for Feb. GE is no way in hell going to 13 by saturday. This is a secret no one ever dare speak. You make money allowing people to close contracts out. Think of Office space, where that guy does a program to grab that extra penny left over from transactions that occur. But this is the legal way.
Legal? Sure it's legal. Do you know the margin requirment for selling 10,000 contracts? Does your broker really let you make the full $10,000? They don't charge any commission for the trade? That's great for you. Oh yes, one more thing. It's insanity beyond belief. Your 'no way' is a fairly accurate statement, but unless it's 100.00% accurate, you are flirting with bankruptcy, and no broker would allow you to hold such a position. Mark
Well the more conservative lowest risk would be the naked put. it has a more limited loss risk. (but extremely unlikely to happen) With commissions it would net 9,000 dollars selling the 10000 7.5 feb puts for GE Do this 12x a year = 108,000 dollars only tie up your money 1 day a month for this. Work out a deal with the broker I mean the pennies are there for the taking and its foolish to not grab em for free and make a profit.
The way I see it there is huge risk. You make 1 penny 12 times per year. If you ever fall on that landmine where you have to put down 5 dollars per share (the stock being taken over or wathever) that is 10000*5*100 = 5 000 000$ down. Unless you can spread that risk over many stocks forget it. Or if you want to do it understand the consequences well, very well. If other people are willing to pay 1 cent for it it may be because it is worth it. What has a value is not free.
ROFL!!! Yea, It'll never happen..lol As a matter of fact I used to talk to a guy fairly regularly about otion related things when I first got into the futures side. He would normally do the credit spreads every month on the Nasdaq and/or SP full size contract. He had been doing it for a couple of years when I met him, and not long after I met him he started thinking the same thing you propose using the Nasdaq futures options. He did it one month and I forget how many he did, but enough that he was surprised the broker even put the order through. Did it again the next month with the same size that would have wiped him out if it went bad, but hey, no way tis gonna go bad...there outta da money. Month 3 he increased size, and the broker took the order and filled him. He probably declared bankruptcy to get out of the debt, but he lost HUGE!!!!! I called him that Friday, but he didn't answer, and I tried a few times the following week, but never heard from him again. Either he was to embarrased and disappeared, or he ate a bullet. The last time I tried to get ahold of him was roughly a month after the trade and the phone was disconnected. I didn't know him well enough to spend time finding out if he was dead or alive, but there is your example. What if they announce late Friday afternoon, or even the rumor comes out just before close Friday they are going to Nationalize the crappy banks, or Ge Capital won't have anymore help because they are part of a larger company that can handle it over the long haul? The would drop like a rock, and you'd be at the gun shop. I also wouldn't think too many brokers are going to make a deal with that much risk. If it was as minimal risk as you say don't you think they would be doing it every month anyway?
Only about $900K with TOS. I pay $1 a contract, so if I tie up $900K of my capital for one day, I can net exactly $0 if the contracts expire worthless (crossing my fingers). I really need to renegotiate my fee schedule.
Right, and comms will run you $10,000 netting a big, fat goose egg. Brilliant Bro -- now please get back to playing in traffic.
Laugh it up guys. But wait till I offer my 5,000 dollar options course. "The secret penny no one tells you about" I will be laughing to the bank as I teach my class filled with high net individuals such as doctors fat with money etc.. who are looking for easy risk free money. (former Madoff/Standford) customers get an extra 5% off and notification on an upcoming taxfree offshore tricks class. The first part of the class I will discuss how options work etc.. then the second part is the secret lesson.
With IB we would end up paying 0.25 on over 10k contracts per month, contracts < 0.05. That would be 2500 comish so 7500 left.