Option Arb

Discussion in 'Options' started by poker, Oct 3, 2006.

  1. Agree, it is possible for the advanced (technologically) retail trader.

    I believe Metooxx who used to post regularly on this forum did/does some form of automated options arbitrage.
     
    #11     Oct 4, 2006
  2. Jesus. And how have your ulcers recovered since you stopped doing this?
     
    #12     Oct 4, 2006
  3. cvds16

    cvds16

    it was quite fun actually, I had my pc configered as a kind of video-game with hot-keys to adapt prices and, if needed, cancel them as fast as possible. The fact that I made money practically every day helped too. The small gains added nicely at the end of the day, only if vol started to move fast in one direction was it hard for me to hedge at decent prices or to keep things under control.
     
    #13     Oct 4, 2006
  4. I would say you were dynamically hedging not arbitraging.

    I probably don't know the exact definition of each term, but I think of arbitraging as simultaneous setup of offsetting transactions resulting in zero risk with a locked profit. Your positions sounds like they had risk and needed constant attention. So I would say they were hedging transactions.

    Don
     
    #14     Oct 4, 2006
  5. MTE

    MTE

    Yeah, that doesn't sound like arbing, more like scalping.
     
    #15     Oct 4, 2006
  6. cvds16

    cvds16

    arbing in options is not an absolute thing, it's more statistical, and it's dynamic hedging. It's not like you will ever get the chance to sell the call buy the put and do the future at same time all out of line. Forget that, it will never happen. And it doesn't happen for market makers either.
     
    #16     Oct 4, 2006
  7. Is arbing without options an absolute thing?

    Don
     
    #17     Oct 4, 2006
  8. cvds16

    cvds16

    it can be if you buy and sell stock simultanously on two different exchanges in different countries and hedge your forex-exposure if necessary. That's pretty close to it.
     
    #18     Oct 4, 2006
  9. Option arbs are rate swap bets with a + expectancy. The thread title is a misnomer in relation to the OP's trading activities.
     
    #19     Oct 4, 2006
  10. CVDS,

    There ya'go, there is such a thing as option arbs.

    Let this be a lesson to you.

    Don

    P.S. Just kidding
     
    #20     Oct 5, 2006