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The OP has started the same thread 3 different times now. In each thread the others on ET try to tell him the folly of his logic, but he refuses to listen. I don't understand his motivation. Does he really think he has found a previously unnoticed flaw in the entire system? Is he a troll? Is...

Mr. Kevin Butler, is it? First, the trading position you use as your set up isn't fully explained. Then, your EV calculation is not accurate. (You use a binary function to determine expected profit/loss, rather than a distribution of future underlying prices.) Even if the formulas were...

If vol is high you are correct. You must choose the strategy to match the situation, rather than look to use one (or two or three) pre-defined strategies in any market environment. If vol is low, and an uptrend is established, I love buying 15 to 20 delta calls, and hedging them delta...

At some point the IRS will have a problem with this.

A fine of $50 million or so is far from sufficient. If they used $21 billion in customer capital to trade with over 7 years, they probably generated a minimum of a few % per year over the amount they paid the customer for the capital. They are at least a few billion ahead by engaging in this...

I haven't followed the exact details of the Obama tax bills, but didn't he suggest that charitable donations no longer be a tax write-off? If that change has occured, then we effectively do tax churches.

It depends what you mean by "up market" as well as "poor strategy". Coming from a high volatility, with a non-drastic up move, you would make money in your stock position and your short OTM call. Conversely, if you are expecting a downmove, especially when vol is low, buying am OTM call...

Selling a covered call is one of the best strategies to make mmoney in an up market. Buying an OTM call requires a monster move, as the OP has figured out.

The only actual trading pit left at the CBOE is the SPX. There are no CBOE clerking jobs available with trading firms. To get an entry level job with a CBOE trading company you will need either quant or programming skills. I suggest you look at the CME/CBOT companies, or perhaps even NYMEX...

Rodney King is exactly correct. From the time we get an underlying update we can reprice an entire option chain in 2ms, and send out new quotes in another 2 ms. If you want to add safety rules, and inventory adjustments it takes another 2 to 3 ms. However, if you are using Opra/Siac data...

Once upon a time, customers had longer to exercise their options than MM's. Now, the rules of when to exercise an option are the same for every market participant. No one knows what they were assigned on until after processing on Saturday, but the notices have to be in by 4:30 central. GOOG...

Order cancellation fees are the only rule that would favor the MM's. In practice though this rule is more for the exchanges that have to process massive amounts of data. Besides, have you looked at the options markets lately? They are mostly a pennywide. MM's are not printing money at the...

Option sellers may do very well for 2, 3, even 5 years. Sooner or later, they all blow out.

OP, Your first mistake is to compare your max loss, to the premium you are paying for your guts strangle. You can only look at long extrinsic value in this way. The guts strangle has more premium in it, because both call and put are in the money. The risk you are putting on is identical to a...

There are too many players that are higher up on the food chain for this to be possible. You have not found an arbitrage, nor will you. I suggest that you stick to the paper trader for a while.

This is very good advice, and should be done whenever possible. Unfortunately, it isn't always that simple. No brokerage company can survive without accepting payment for order flow in a market where these are paid, regardless of their moral position. In fact, my old company was one of those...

The victims in pre-arranged trading are the market participants NOT INVOLVED in the pre-arranged trade. The willing participants are the ones breaking the law. IOI's are just pre-arranged trading by another name. It should not be allowed.

You are wrong. Your statements are not based on facts. 30 seconds of research will show you that. http://blogs.wsj.com/marketbeat/2009/05/18/dark-pool-market-share-battle-intensifies/ "GETCO Execution Services, the dark pool run by Chicago market maker Global Electronic Trading Co...

The low spreads are an illusion. They increase the price impact of liquidity, which equals LESS liquidity not more. They are driving out the trading strategies that provide real liquidity. My company does invest millions and we compete just fine. We are also creating algo execution tools for...

I am probably not using the term internalization as it is legally defined. However, Getco definitely makes trades against order chicago order flow in their ping destination dark pool, which only they see. Sounds like internalization to me. I am curious as to why you say this is not, though...