It was more to illusrate debit spreads vs credit spreads, same strike,expiry..not suggesting you put on boxes to earn the risk free rate of return
Over the long run, the math would suggest they are about even for profits once you factor in the risk reward I assume. I'm talking about cash settled options, no risk of assignment.
fyi the OP doesn't actually believe options traders can make money (except himself day trading 0dte).
Do you really mean true spreads, or mabe some other constructs? IMO with 2-leg spreads one side loses while the other side wins. Just show such a setup you mean in this options tool.
https://optioncreator.com/stwcjtb buy 1 spx 20-Sep-2024 $45 call $40.10 sell 1 spx 20-Sep-2024 $46 call $40.06 buy 1 spx 20-Sep-2024 $46 put $21.31 sell 1 spx 20-Sep-2024 $45 put $21.03 Total cost: $32 Proceeds at expiry (1 year): $68 So at the end of the year I am making 68-32=$36??? What am I missing here?
You make $68 profit per contract according to this tool, but in reality it's a little bit complicated: you have to calc it yourself from your margin requirements etc. It depends also on whether your account is a margin acct or a cash acct. Ie. you will get $68 at the end, but how much profit this makes, you have to calc yourself. So, your construct is either a Short Butterfly or a Short Condor, I think, consisting of a Call Spread and a Put Spread. But it's in reality an arbitrage trade , if the data is correct. Btw, above you have a typo: I guess you mean "Sep 2024" Fixed Dunno what else you mean or expect. Elaborate pls. Btw, you better should enter (change) also the "Current Stock Price", and better set the risk-freerate to 0, IMO. Then the Volatilities will be "corrected" by the program... ATTN: there are 2 such "Risk-free Rate" fields... see further down...