Reading through the Oanda forum tonight I see you gave the game away on the 9th: KO wrote: "Additionally, one can replicate a synthetic European exotic with an American-corridor option..." Do you think Oanda monitors your posts? You also at least implicitly mentioned the triangle arb. That a very narrow (in time) American box would be equivalent to a European immediately occurred to me when I read your first few posts on this subject here on ET, but on further consideration I assumed that a forward-start American corridor would price as a European anyway. Am I wrong in this assumption or did Oanda's forward-start box pricing algo break down for very narrow boxes?
Keep your lingo puzzling that way everyone will be really impressed from this nonsense emitted from the dark chute..
Low self esteemed individuals talk in cryptic/puzzling/nonsense lingo to provide a false impression how much they know others do not. I have a friend who has turned strict vegetarian and he throws a hissy fit when seated at a pizza joint. The guys from the kitchen came and told him take a hike. I was shocked, but not angry.
AYFN? (Are you f*cking nuts?) The language is crystal clear to anyone familiar with options trading. Are you really a hedge fund trader? Which one? Maybe I can find a way to short it. 90% of the posts on ET are completely devoid of useful information. Atticus's posts are among the few that I pay any attention to. The other way to get noticed here is to be so creatively idiotic that you provide entertainment. Like BullzNBearz Analytics. You aren't there yet, but keep trying.
No one with an IQ below 70. BTW, I asked a serious question on this thread and you immediately obscured it with three garbage posts. What exactly was the point of that? Maybe you can answer the question? No? I didn't think so. If you don't understand the common jargon, you'll never comprehend the topic of the thread.
Exactly, it fails [failed] on the skinny box. Adding as little as 5 minutes duration to the neutral (synthetic) European would reduce payouts by as much as 8-basis. At its best, the arb was paying 25bp net of replication on EURUSD and USDJPY. I'll post some scans. I assumed you were privy from the first-post but the arb was still exploitable. The arb was down to 4bp when KO posted.
LOL.. Reality is lost on you, son. I have $10k saying you wouldn't say that to his face and live to see another day. Go live your meaningless life, have some meaningless kids and just go die. Go die somewhere else besides here. There's no need talking sh*t like that to one of the better contributors of this site.
I think that you are not right on this one. Atticus is using actual option terminology (the language is not common even to people who trade "more common" options, which are called vanilla options as opposed to exotic options. Binary range options/bets, touch/etc options, and vanilla options (the one that any option trader knows about) actually do exist. Just take some time to learn about them. Once you learn options and become profitable, you would most likely never revert back to stocks. His logic is also very sound. I think (but not sure) that what he is saying is that one can get free money exploiting two ways to look the european binary range bet which pays depending on the outcome at expiration. In this case, a bet is placed and if the underlying is on the outside range, the better gets 100 for each bet placed. What I understand him saying is that he wants to hedge this bet by building an opposite transaction which rests on this: instead of linking the position to the expiration date T, what if one looks at an interval of expirations taking place in interval [T-Epsilon, T] where Epsilon will be taken very small? There are possible price paths that will lie in interval [T-Epsilon, T[, where the latter "[" means the last instant is excluded. Therefore if one tried to approximate the price the binary range bet by pricing it as a time-dependent position corresponding to interval [T-Epsilon, T], one should then allocate a premimum reflecting possible paths that will lie in interval [T-Epsilon, T[. This should be true for any positive small Epsilon (as small as you wish but positive). What I think is very interesting is that even if Epsilon was to tend towards zero, I think that the american pricing (involing interval [T-Epsilon, T]) may not converge to the european pricing. I have not looked at the maths of this, but my sense is that there is a discontinuity at time T between the limit of the american value (which will be higher) and the european value (which would be lower). In practice I would say that one can choose an Epsilon small enough, but in theory even the smallest of all epsilons would not make that gap disappear. If this is the case, there is no way one can remove this arbitrage as long as there are european and american instruments based on this modeling and can implement it. In other words, if models are used, there is discontinuity and no one can do a damn about it! I would send a note to Atticus if I were you,and go back to good terms. The least we can say is that he is not selfish as he is sharing very worthy information. Let us not attack personalities. The other lesson that one can take away is to grasp the crux of the idea, and implement it elsewhere. The european/american thing is a goldmine. I have various plays myself that rest on it in equities.
Could I suggest that we also tell him that we can accept him if he can avoid attacking personalities, and even better if he can send a note to Atticus to put things back to normal? I think many people would feel better, and he would be welcomed back. I am sure most people here have good hearts, and would not oppose giving second and even more chances.