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No, spread trading is not arbitrage.

For what it's worth Nitro is 100% correct. Arbitrage trading is what floor traders do, it is virtually impossible to trade arbitrage for a retail off-floor trader. By the way, you don't even mention what arbitrage strategies you're thinking of!?

ktrader, I didn't say you cannot simulate it, I said you cannot simulate it EXACTLY. In other words, there're other factors that need to be considered when trading options in place of VIX futures.

You cannot simulate VIX futures trades with SPY/ES options exactly, but since VIX is the implied volatility of SPX options you could buy straddles when VIX is at a low, which would be similar to going long VIX futures. However, the problem is time decay, which is non-existent in futures. When...

See my reply in the previous thread. You'll have to ask IB about that.

"Converted" is not the term that is used, the correct term to use is you got assigned on your short leg. What do you mean by "normal"? It happens if the short option is ITM enough. A bit more details would help to get the full picture and thus provide a better answer to your question. By the...

And you think that going with a small broker will solve that problem!?:confused: I can assure you that no broker is perfect, otherwise everyone else would be out of business. It all comes down to what you're looking for in a broker. For example, some people like IB because they get very low...

In other words, you don't need a PhD in Maths/Stats, which is exactly what I said. :cool:

First of all, Black-Scholes assumes log-normal probability distribution, which does not hold in reality, so even if you can derive the B-S in your sleep it will still fail you in the real world. Hence, options trading is not all about a pricing model. Besides, you don't need a PhD in...

Mlipsky, Everything you said applies to equity and index options, but not to futures options. FredBloggs was asking about GLOBEX options, which are futures options.

There's an obvious limitation of this study. That is, it considers only options that are held to expiry, which may only represent a small portion of the total number of contracts that existed at some point during the life of an option. So although over 76% of options expire worthless (according...

don't trade the Euro, but just a guess - US Trade Balance numbers were released at 8:30 am ET.

10:00 am ET

:) :D

You have kind of answered your own question. If the market reverses at your stop then once you have decided on your stop, just move it a bit further away.

I saw it too. VIX measures the IV of SPX options so if the options' IV spiked up for some reason, VIX would reflect that. It might've been just a bad quote though.

CME uses SPAN margining so you should look under SPAN on their website.

Unfortunately, there's no way of knowing what the other person was thinking or doing when he/she exercised those calls early and handed over some of his/her money to you. It is the option's holder right to exercise those options at any time and for whatever reason, no matter how irrational it...

I agree, no book will ever make you a profitable trader, but you still need to start somewhere especially if you're a newbie. So I suggest you start reading some books on trading in general as well as books specific to the instruments you want to trade (if you want to trade options then read...

Everyone's goal here is to make money. I doubt that some peolpe actually would like to lose money.:D If that's the only book you've read on options and trading then you have a long way to go. Options and markets in general (stocks, futures,....) are not a "make lots of money quickly" scheme...