No Risk Stock Option Dividend trades

Discussion in 'Options' started by Johnny Boy, Mar 17, 2025.

  1. 2rosy

    2rosy

    just looking at kalshi vs various vertical spreads and sports books today. very cheap; maybe missing something
     
    #51     Mar 27, 2025
  2. Maybe hard to get access? I have never looked at it.

    Some silly stuff does happen. For example, the second coming of Jesus is trading at 300bp (https://polymarket.com/event/will-jesus-christ-return-in-2025). Sell that, buy CDS on USA fpr 50bps and it's a relative value trade where you make 250bps riskless
     
    #52     Mar 27, 2025
  3. newwurldmn

    newwurldmn

    if Jesus comes though US might not pay and Jesus might collect
     
    #53     Mar 27, 2025
  4. So you're right again. It's not riskless :D
     
    #54     Mar 27, 2025
    newwurldmn likes this.
  5. newwurldmn

    newwurldmn

    though for you and me, Jesus will probably come and collect anyway. :)
     
    #55     Mar 28, 2025
  6. cesfx

    cesfx

    #56     Mar 28, 2025
  7. The only reason 5.00 was lost as i missed the stock assignment at 5AM before trading opened and did not get a chance to see the put on opening. Feel better now?
     
    #57     Mar 28, 2025
  8. namche

    namche

    pardon me but this is really dumb.

    You are long 1.00 delta stock and short 1.00 delta stock in the synthetic. the synthetic trades at a discount to the actual shares = the dividend and rates. You are buying a conversion which is long stock and short synthetic stock. That would be an arbitrage if the synthetic was not discounted by the declared dividend when you shorted it. Long stock, short call and long put is a conversion.
     
    #58     Mar 28, 2025
    cesfx likes this.
  9. You are forgetting an important fact. The options can be bought at favorable prices getting great executions from the broker. Its why i use Fidelity. I just did one involving Oracle. Only certain dividend high volume out of the money calls are used with the same priced puts short term expiration. The loss if called is extremely small and odds are small if out of the money call used. If not called you get the dividend
     
    #59     Mar 28, 2025
  10. namche

    namche

    you don't know what you're doing. You receive the dividend but are shorting the synthetic under where the shares are trading. It has nothing to do with assigning on the short call. You could trade the synthetic many strikes away virtually guaranteeing you won't be assigned.
     
    #60     Mar 28, 2025