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See my answer in your thread!:)

The relationship is called the Jelly Roll, i.e. long synthetic stock in the front month and a short synthetic in the back month (or vice versa). At expiry of the front month you are left with a short synthetic stock, so in order to hedge it to expiry of the back month you need to buy the actual...

50-150 contracts per trade? Talk to Thinkorswim (you can negotiate a lower rate than the one posted) or Interactive Brokers, depending on what features you're looking for.

As I said in my post, if you see the order flow then that's a different story because then you can see whether the intiator was bidding or offering. This is NOT the same as looking at the total put/call volume and then trying to make sense out of it.

:D :D :D Every contract has a buyer and a seller so how can anyone determine anything by looking at the put/call ratio!? You can't say that people are buying calls cause at the same time other people are selling calls to those buyers and etc. Unless, of course, you can see the order flow...

Spot means stock. - edge means negative edge (i.e. advantage). What rally meant was that you should trade the stock to adjust deltas rather than the option because stocks have narrower bid/ask spreads and thus you don't overpay for the adjustment, so to speak. In other words, with options you...

Oh boy, not again!:eek: Bob, For the last time, synthetics means the positions are equivalent in every aspect - i.e. same max profit, same max loss, same Greeks. Theta is exactly the same, Gamma is exactly the same, vega is exactly the same and etc. E.g. when you buy a stock you need 2...

As I said before, the discount is the nature of pricing European-style put options. As they get closer to expiry the discount decreases, eventually they get to parity. This is not a mispricing! It is the way European-style options are priced!

arizonadreamer, Consider this. Buying SPX 1900 put at 318 means $31,800 in cash gets tied up in the trade for 1059 days. The lost interest on that amount is $4,844 (31,800*0.0525*1059/365). I bet you forgot about that! But, hey, who are we to tell you otherwise, if you think it'll work...

Yes, that is correct. This is only a pilot (i.e. test) program not a full-blown move to penny pricing.

Well, that's the problem. 190 put trading at 47.80 with the SPY at 142.28, which means it is trading 0.08 above intrinsic. You can rest assured you'll be assigned!

European-style deep ITM put options always trade at a discount to the intrinsic value due to the unavailability of early exercise. The difference is equal to the cost of carry to expiry, so as the time to expiry decreases so does the discount. This is not an arb opportunity!

Most index options are European-style, including SPX, XSP, RUT, NDX, MNX, DJX and etc. OEX is more of an exception being American-style.

Retail brokers allow 50% margin, which means that you can buy twice the amount of cash you have in your account. If you have $25K or over you'll get 4x intraday margin (i.e. 25K cash = 100k intraday buying power). Most likely your broker will not allow you to place an order for 250,000 shares...

Why not, what's holding period has to do with it?

OEX options are pit-traded hence the slower confirms, order placings, cancellations and etc. One note of caution when trading OEX options is the American styling making them prone to early exercise. To avoid that (if desired) one can trade XEO, which is the same index, but has European-style...

You cannot say that one is better than the other, each has its pros and cons. For cash-settled indices it is definitely better to have European as you do not have a risk of early exercise and thus no risk of suddenly finding yourself in an unhedged unlimited risk position.

Bob, As Nikko has already mentioned it above, your intial post said nothing about different expirations or adjustments. Are we supposed to read your mind on this stuff!?

Bob, I asked you to explain what you do with respect to this post: Here you say that if you short 1000 stock, buy 10 call and sell 10 puts (at the same strike) you'll be somehow making money! This is called a reversal or in more layman's terms you short the stock and then long the...

Bob, This is B.S. (pardon my french)! A conversion/reversal is based on the put-call parity, the most basic of option pricing relationships, and is an arb trade when the put-call parity is out of whack, but you can imagine how often that happens in today's options markets... Give us an...