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Selling naked puts achieves the same thing with half the commissions and slippage. Your other concern, as you have pointed out, is the correlation.

Stock trades take 3 days to settle. Talk to your broker what they do and don't allow.

The bid/ask spread is the function of liquidity. Less liquidity means wider spread as the market makers have to protect themselves. Also, with the exception of stocks on penny-pricing pilot program, the minimum tick is 0.05 for options under 3.00 and 0.10 for options over 3.00. So for a 1.00...

Options don't trade in premarket and a market maker or anyone would be really dumb to trade with you at a price that doesn't reflect the current market price.

The maths behind early call exercise are pretty simple. If the dividend is more than the cost of carry to expiry plus the price of corresponding put then the call will be exercised.

It's all about the dividend payment, i.e. ex-dividend date. Always check ITM calls when the stock is about to go ex-div. And, yes, assigments happen overnight hence you don't find out about until the next day. This is where the whole early call exercise prior to ex-div and shorts being...

European style options, almost all index options, can be exercised only on expiration day. American style options, all equity and ETF options and some index options, can be exercised at any time during the life of the option.

See my answer in this thread.

If a put option trades at parity or very close to it then you do have a risk of early exercise. Mathematically, if the cost of carry is more than the price of corresponding call then an ITM put will be exercised early. You can find some basic examples here.

Yes, there's something you're missing and the risk graph is not showing it, it's the cost of carry, which is about $3.10 according to the conversion/reversal. So any "risk-free" profit you see will be wiped out by the cost of carry.

There's no reason for the "proprietary" models to give significantly different values as binomial and B-S are not that bad, if you know what I mean.

I've never claimed I have done that, all I'm saying is that it's possible, but the risk is just too great.

These results don't mean anything unless you know what kind of risk they are taking. As I said, one can be very lucky and turn $5K into $2mil in one day (I've seen an option go from 0.05 in the morning to 20.00 in the afternoon), but the probability of that happening is virtually zero. Obviously...

I can do 10,000% in 1 day. It's just a matter of luck. However, don't forget that the probability that you are gonna lose 100% is very high.

Coach, Ex-dividend date is the only significant one when it comes to early exercise of calls. If you're assigned on the day before ex-div, and naturally you will only find out about it on ex-div date, then you're responsible for the dividend, cause you were short stock into ex-div. Even if you...

An Iron butterfly is exactly the same as a butterfly, assuming same strike prices.

Delta hedging would achieve a complete hedge over small price changes. So if you're buying ATM options, which have a delta of around 0.5 then you need 2 option contracts for each futures contract. However, this would work both ways, meaning that you not only won't lose anything, but you also...

IRS = Internal Revenue Service :D or Interest Rate Swap.

Yes, yes and yes.:)

Thinkorswim is a brokerage not a MM. However, you can call their trade desk and they will do the calling for you.