@VolSkewTrader, by getting personal, you just prove that you are out of arguments, nothing more, man I asked you publicly to prove your claim that my FairPut allegedly would create arbitrage, but you haven't answered that posting yet, instead coming with your above off-topic nonsense "argument". You surely can think much and believe much, but whether it's true is of course another question...
From the said private discussion with @VolSkewTrader regarding the alleged arbitrage of FairPut: thecoder wrote:
Man, I'm arguing with some self-proclaimed "experts" like @VolSkewTrader who have no real clue about the lognormal distribution!... This can only mean the American brain-drain in action Someone please inform Mr. Trump not to close the borders for foreign scientists
destriero wrote: Not true, idiot! This already has been analyzed and tested, and cleared to be not the case! You are just incapable to grasp it! Read the definition of Arbitrage some postings above, ie.: https://www.elitetrader.com/et/thre...e-chameleon-option.349956/page-5#post-5201939 Arbitrage has primarily to do with the payoff, not necessarily with the time value of the option. As long as S, s, r, q stay the same then there is no payoff, so no arbitrage. And if these params change, then there is of course a payoff, but this is then not an arbitrage (b/c the params have changed)! And the premium of FairPUT is the same of PUT. So, then how can arbitrage at all be possible? Is not possible. The mathematical relation is: profit = credit + payoff where credit and payoff can also be negative, so then of course also profit. Ie. credit is negative for Long and positive for Short...
how does it feel to spend so much time explaining basic concepts to him In private and then watch him publicly lambast you?