You call your broker at GS and tell them what you want to trade and they go search for a counterparty, or potentially act as your counterparty. All very high touch and they're not going to do it for you unless it's going to be worth their while, plus since they're exposed to your counterparty risk you'll need to have a very large balance sheet that effectively no retail trader posesses. Basically if you have to ask how OTC works (and we're not talking pink sheets here) you haven't a chance of trading OTC. Not trying to be dismissive, just trying to save you wasting any more time unnecessarily. If you're an acredited investor you may be able to purchase warrants or instruments like warrants which are somewhat like long dated options from those who were granted them for employment. Again it's a game you need to understand if you're going to play it. If you haven't looked at traded warrants yet you might want to look into that. You can almost synthetically create a long-term option with one.
Yeap, there is a reason why nobody is trading longer than 2 years options. So maybe the idea should be just abandoned...
If he were legit enough to have institutional-level coverage, he would already know the answer, and wouldn't have started this thread.
Perfect! I take it you are fine with selling me an SPX put for Dec 2025 at the same vol than one maturing in 2020
Take a look at the time variable is BS. Hint, it's part of an exponent. In fact a 2025 put won't sell for much more than a 2020 put. In fact what actually happens is that the price of the put asymptomatically approaches the price of the stock, which is itself a real option. If the extrensic of the 2020 already approaches the stock price, there's not much further for it to go, no matter how many years you add.
So are we done at that price? I'd love to arb you right here. Hint: I actually trade those for an institution
Was anything I said incorrect, always happy to learn? Is time not less and less significant the longer you go out in an option? Is the function not exponential? Does the price of an option not eventually approach the price of the security?
If you do exchange Flex you can visit the OCC site, it links from the FLEX page and see what has traded. Most of it is under 5 years and a small percentage is longer - you can go out as long as 15years with Flex. Heavily dominated by index names and deal stocks. Assume your entry will be OK and you will be raped if you go to exit very early. You don't have to enter an order to get a sense of the market - they do a RFQ, but don't expect to get filled if you do a ton of RFQs with trading.