LSE option on RBS?

Discussion in 'Options' started by heech, Apr 6, 2009.

  1. heech

    heech

    Hi,

    I've never played with European listed options before. But I was looking at RBS, and would like some input from others.

    Here's what IB seems to be telling me. (I'm not logged into TWS, this is from the UK contract center which is showing me end-ofday prices from Friday):

    http://www.interactivebrokers.co.uk/contract_info/

    RBS stock closed Friday at "0.3060 GBP". And the ATM 0.3 call expiring April 17th closed at 0.04 on Friday.

    If that's the case... that's a really healthy option premium. It seems like implied volatility would be around 1.85. It seems to me the US-listed options that are ATM aren't anywhere close... implied volatility of 1.2-1.4 at end of day Friday.

    Am I missing something? Why would there be such a large price gap between the two? Why aren't they arb'ed until they're basically identical?