This isn't an issue because it's risk free (at least as presented so far). I'd load up on such a trade 24/7 since once in awhile you get a favorable expiration... or even a favorable underlying position a week or two B4 expiration.
Yeah, I understand that it is "risk free" as laid out - just saying that it might not be any better then the .05 at best, even assuming all numbers are correct. I guess just because it is laid out as being risk free, I tend to think there is something missing. Also remember that the quotes as I understand sometimes may only be guaranteed to be good for a 10 lot or maybe a 50 lot or maybe that changed, but the point being maybe only $50 can be made. I guess the only thing the OP could do is try. JJacksET
How much did the stock move within the 20 minutes? I've legged into these types of trades before. You just can't put this on as a single iron butterfly trade for a credit of 1 or greater.
I just did some looking around and I can't find what the stock or ETF would be. If the OP is still here, is this really a trade that you did and can you let us know what it was? Also, were you able to do any kind of quantity of the trade for $105/credit? I found a handful of stocks near 50.00, but mostly with $5 increments. The exceptions where like QQQQ, which wasn't super close to $50.00 and were nowhere near $1 credit for a $1 strike position for May options. Maybe farther out ones? If only farther out ones would work, wouldn't that mean holding for a long time just to gain the .05? Maybe OK, but maybe not so great. For the fun of it I looked at DNDN which is in the upper 30s but has $1 strike increments and is very high IV. There are no exactly ATM ones at close, but you can get about .70 credit for the closest Mays. Further out the bid/ask spreads seem to get worse, and you don't even get as much. JJacksET4
Yes, something is missing. The only way to get a risk free trade is to leg in. Floor traders would be all over anything risk free, ala conversions, reversals, etc.
You should've mentioned this right at the start. Obviously, it's possible to achieve such positions by legging in. So, yes, you do have a risk free position.
Yeah, you're right, my aplogies. In my defense I must say that I didn't ask HOW to achieve such positions but rather WHAT ARE the risk characteristics of them. Somehow however the conversation got focused on the latter. Perhaps it is not a surprise, you guys are a very analitycal bunch I also should say that I stumbled upon this unwittingly. Now, based on the consensus that this is a "good to be in" trade, I'm going to explore it more systematically i.e. trying to pick out such opportunities off of a day chart. Thanks to everybody!
The reason that repliers focused in on achieving such a position is that seasoned traders know that in order to get a risk free position, 1) you have to leg in or 2) something has been overlooked and you're in for a rude awakening when you find out what it is (non standard options, etc.).