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I posted on CTIC message board to let longs know about this opportunity to replace their longs with synthetic longs, i.e. they can sell the stock now at $.77, and get a stynthetic long for the stock equivalent price of $.60 (up to 25 puts or 2500 shares), but it doesn't seem there are any...

I think I now have the answer to my question: In as much as there are bears who would pay huge carry costs to short the stock, some would rather buy the puts; however, that is VERY expensive, hence they sell the calls as well of the same strike price, (and even offer a synthetic long stock...

I could live with it if I didn't manage to convince you of the reality of the situation; that wasn't my agenda, and a pity to waste the time.

Although there have been a few other informative posts, this was the most educational to me about the % IB charges. Nonetheless: You can still easily buy the Feb 1 calls for $.10 (= median between bid & ask, and also = last price), and sell the puts for $.55, netting you $.45, while the...

You don't understand, I am afraid to place the trade, just like you! You all are saying "it can't be else it would have already been arbed, and I am also saying "but I can't understand what is missing. 1. There is no dividend 2. The opportunity should be taken even for non-arb purposes...

500 people saying the same thing means less to me than one person who can respond to my rebuttal. Did you talk to Locate Stock? Did you check the IB supply of CTIC? Did anyone provide an answer why institutional traders don't sell their longs buy the March calls, and sell the March puts?

Please educate me (and btw, this is what I am asking for in the title of my thread), and be specific!

Well it seemingly couldn't or shouldn't be more than the street cost such as from Locate Stock, which charges the clearance firm only 1/2 cent per share, and which is seemingly the amount passed through to the customer (at least with certain brokers).

Humble people have less ego problems. I am going to surprise you all and give you the name of the stock: Although it's way down today and the arbitrage oppty not always there, take a look now at CTIC March $1 strike price, calls & puts. As for you "non-believers", you can check with IB...

All I could say is that real traders post quality posts, and "others" post silly posts.

:p

What I really want to know is the following: If I do have a broker who allow a limited number of shares to be shorted (which are not htb & no fee to borrow the stock), buy calls & sells puts (i.e. taking on a "reversal" position), what's the likelihood of a forced buy-in due to day to day...

I've got an alternative explanation: they have already taken a big profit this year, and the stock may double or triple in a few days, and they want to hold on to the stock for a long term gain and tax benefit, hence to buy the puts instead of selling the stock before the year is over.

If there is an advantage with IB, it could only happen if they would do the following: they route the orders of their customers who are buying and their own customers who are selling to the SAME exchange, so that they stand to become coutnerparties*, and DON'T step in the middle themselves by...

I thank everyone, but the point about the carry cost is very incorrect. Reason 1: It's relevant to the February expiration as well (and even more so last week). Reason 2: there is no need to short the stock, rather, for whoever wants to buy the stock, can simply buy the calls and sell...

I thank you for your responses and concern, but what you're saying is incorrect. If the puts are in-the-money even by $.01, you hold the whole arbitrage oppty disappears?? That's simply not the case, rather you have to compare the out-of the-money premiums of the calls versus the out-of-$...

The point is the amount of the premium, even if out-of-the-money, and unless the stock & strike price are the same, either the call or the put is ALWAYS out-of-the money.

Not correct, because here you hold the calls yourself. And if you ask about shorting the stock for arbitrage purposes, so it's anyway far from being a dividend paying stock.

I have my doubts about what you're saying, as it's hard-to-borrow with Penson, but not by IB, and I'm quite sure not htd for institutional traders. Also there is Locate Stock and other such services. Maybe you say because it's not available in big supply?

Yes, it's hard to borrow.