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I actually made a small spreadsheet where I punch in the values for the stock, call, and put bid/ask, dividends, and days to expiration, and interest rate (T-bill rate), and it'll calculate whether a conversion or reversal is profitable or not. It calculates it based on buying at ask, and...

the OCC distributes assignments to brokerages randomly, then the brokerages have their own method (which must be approved by the OCC) for distributing them, some might be FIFO, others might be random.

not to mention that the component might have a higher or lower volatility then the overall index. You could have a stock that even with a market meltdown, would only move a few %, and likewise if the market bubbles.

If you buy stock, then short call and long a put at the same strike, that's a Conversion, and all you're doing is synthesizing interest (but less then you'd get by putting the money you put into the stock into a t-bill or something, because you're paying commissions for 3 orders + spreads on the...

Ah, nice, the EFP lets you buy stock/sell SSF or short stock/buy SSF in one single atomic transaction. As for which stock is best, dividends don't matter, those are priced into the SSF (which is used by EFP)

Ok, well when Iran manages to force the Nymex to quote light sweet crude in euros or some other currency in lieu of dollars, they succeed.. otherwise, even if the US wants to buy iranian oil and they won't accept the dollar, the US can just exchange dollars for other currencies on the highly...

To the person saying 1 cancel makes the $1.75 commish worth it, that depends, are you doing 1 contract a trade? The $1.75 is PER CONTRACT The $1.20 modification/cancel fee is PER ORDER

synthetic interest: Buy stock, sell SSFs on it.

Ouch.. 99% gap-down.. That's pretty rare though, to have a stock halted mid-day then lose all it's value when it re-opens, so usually that shouldn't even be a consideration.

Someone mentioned to me that they thought PPL was a possible takeover target, and just yesterday I found some data that makes it a strong possibility. Monday, PPL stock shoots up on no news, Tuesday, somebody buys 800 contracts of PPL July 45 calls.. a contract that otherwise has practically...

First off, on a 4 leg trade like this, you never buy at the ask and sell at the bid, you'll just kill yourself on the spreads there. You need to place the trades as a spread trade, at a net credit or debit, depending on your strategy. If you try to do all 4 legs seperately, you'll end up...

Yeah.. quitting your job to trade 150K left in a retirement account (probably 100K after taxes/penalties), is at minimum a huge gamble.

If you want ZERO RISK. Go to www.treasurydirect.gov open an account there, you can set up a schedule to auto-buy 4 week t-bills every 4 weeks, no commissions or anything. This is as zero risk as it gets, i mean, granted, you might have a tiny interest rate risk if rates get hiked, but...

the fed is NOT going to lower rates by 125 basis points! it would take them at least a year to lower rates by that much.. at LEAST!

Any HONEST prop shop wouldn't lie if you asked them if they took losses from traders. They might not tell you the $ amount since that's their business and not yours. Why would they lie about something when it's so obvious that they'd be lying? Everybody knows that it's possible to lose more...

OH, the other problem w/ being assigned early, is you may miss a dividend. Example: Stock is at 100, you do your 100/105 spread (long 100, short 105). Stock shoots up to 200, you think, great, gaurenteed $5 on expiration day. Tommorow there's a $2 dividend, the 105 call gets assigned...

costs for commissions, and costs for leverage should be 2 seperate things. most firms already charge you interest for overnight borrowing, as well as an additional haircut charge if you're levered more then X to 1. If you pay more for commissions at a prop firm then you do at retail (like...

I'm interested in options, I don't see any real money being made with intra-day equity trading. Back when the spreads were 1/4 of a point, there were tons more opportunities for equity day trading, but now, with penny spreads, it's just too hard to beat commissions/fees.

That's very true, but remember, for most brokers - Margin on a spread is the amount between the spread (in this case, $500 / contract) - Margin on stock is 50%, in this case, Around $60 / share, or $6000 / contract Being assigned early can easily result in a margin call, and if your...

General rule of thumb. Anytime you're using a DEBIT SPREAD, your max gain should be at least 3X your max risk (max risk being the debit you put down). Also, be careful with spreads, understand the risk of early exercise. You may be assigned on your short option prior to the expiration day...