(almost) riskless strategy ?

[Ghost of Cutten]

The problem with it is that your expected return is zero minus transactions costs, unless you have some way to work out which occasions are less likely than normal to experience big moves.

It's like saying "Hey, I have this great system at roulette - just bet against it hitting zero. You win 36 times out of 37!"

 

[Traderkip]

kiwi 1 ........I would agree with you IF you mean DOTM CALL &
PUT CREDIT SPREADS....Not much premium gained,
but good trade profit potential to expiration.......

Trader Kip

 

[ForexForex]

Quote from ForexForex:
DeepITM-Put-Spread
The bid ask spread, plus commissions gives you a guaranteed loss, post some actual paper trades for a closer look.

Quote from spindr0:
If the spread had guaranteed losses, no one would ever do them. Try again...check synthetics

How about posting an example?

 

[newguy05]

Quote from kiwi1:

(almost) riskless strategy ?


1) a couple/few weeks before expiration
2) DeepOTM-Call-Spread or DeepITM-Put-Spread (on some major index underlying)
3) hold to worthless expiration.

No

 

[heech]

You have to understand: Someone is taking the other side of that trade, and they at least disagree with you that the outcome is "certain". Are you sure you have a better idea of the probabilities than they do?

 

[tradingjournals]

Quote from heech:

Someone is taking the other side of that trade..

No true in general.

 

[tradingjournals]

Quote from spindr0:

If the spread had guaranteed losses, no one would ever do them.

You assume that the other side sees that there is a guaranteed loss, and that it is one single individual involved in other side. Is it always true?

 

[spindr0]

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Quote from spindr0:
If the spread had guaranteed losses, no one would ever do them. Try again...check synthetics
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Quote from ForexForex:

How about posting an example?

How about looking at some optipon chains and determining if there are any ITM spreads that don't result in guaranteed losses?

 

[spindr0]

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Quote from spindr0:
If the spread had guaranteed losses, no one would ever do them. Try again...check synthetics
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Quote from tradingjournals:

You assume that the other side sees that there is a guaranteed loss, and that it is one single individual involved in other side. Is it always true?

You assume too much.

If the spreads had guaranteed losses, everyone would be loading up the truck with all they could eat.

 

[ForexForex]

Quote from spindr0:

How about looking at some optipon chains and determining if there are any ITM spreads that don't result in guaranteed losses?

That's up to you .... I'm sure the OP would be grateful of an actual DeepITM-Put-Spread example. We are on page 4 without any real examples, lets not get to page 5.


PS ..... You have a "typo", for some reason you switched from Deep ITM to ITM. That's a significant change.




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