Options arbitrage

Discussion in 'Options' started by Mispe, Dec 12, 2002.

  1. nitro

    nitro

    True...

    Nitro
     
    #21     Dec 14, 2002
  2. Word
     
    #22     Dec 14, 2002
  3. maglia rosa

    maglia rosa Guest

    With these one to three word posts, I could be an "Elite member" two-thousand-lot-poster within days as well......
    Keep up the race though. somebody has to do it and find out what comes after "Elite member". I'm curious too.
     
    #23     Dec 14, 2002
  4. Maverick74

    Maverick74

    It's interesting that on these forums so many people talk about option spreads and why they are so wide. First of all, I never thought of the actual spread in terms on cents but in terms of vol. For example, the dec 60's are bid 60 vol, offered at 62 vol, not the dec 60's are bid at 5.20 and offered at at 5.80. To me that is a very attractive spread. Also I hope you guys on here realize that a nickel spread (.30 by .35) is the same spread as (6.00 by 6.90). As the option price goes higher you need to have a wider difference in the spread. In fact the odd thing is in terms of vol, some of the nickel spreads out there are actually the worst spreads, i.e. .05 by .10 or .15 by .20. That can be as much as 10 to 15 pts of vol difference which is huge.

    Last thing, I noticed that most of the big money we make on our trades is on the most illiquid options with the worst spreads and our smallest winners are on the most liquid options with the tightest spreads.
     
    #24     Dec 14, 2002
  5. Hopefully profitability.
     
    #25     Dec 14, 2002
  6. Good point. Except that whichever way you look at them they are still very wide compared to the underlyings. I'm not trying to make money trading options (well, maybe some, but that's not the main objective), I have a short term equity strategy and am tryng to hedge the downside... Thus, having to do a roundtrip on 2000 contracts in 24 hours can be rather costly, I'm afraid a bit too costly for my strategy, but having gotten some of y'all's advice, it seems I may be able to work smth out in the end.
    Your arguments are valid, but still, options spreads are very wide.
     
    #26     Dec 14, 2002
  7. They just have found a small opportunity and know enough that by sharing everything it won't exist.
     
    #27     Dec 15, 2002
  8. Things have changed a lot in the last few year.

    Half the posters are now strangers completely. I used to know them by username, knew a few things about them and we talked. Now.....??
     
    #28     Dec 15, 2002
  9. Survivorship bias in relatively tough market conditions (as compared to the froth of 99-00), has given rise to the manifestation of the often cited "5% make it" number... couple this with a rush of new blood, and you have a major proportionate dilution of familiar faces...

    Moreover, the overall less frothy conditions has given rise to an impersonal atmosphere amongst market participants... enthusiastic communication amongst the trading community inevitably goes down when every Tom, Dick and Sally with half a brain isn't bringing in their $5k a day... a sense of realism has dawned (amongst traders, brokers and indeed vendors), and the wheat and the chaff are finally parting ways...

    A contrarian may argue that things are ripe for a positive change :cool:
     
    #29     Dec 15, 2002
  10. nitro

    nitro

    :D

    nitro
     
    #30     Dec 15, 2002