Box Spread Arbitrage

Quote from chicagodon:

Thank you, I completely agree with what your said. I calculated the delta ratio and saw that it was only around .25 which was lower then it probably should be, I have 5 though. I'm going to study more about synthetics this weekend.

I feel like I read Cottle and Nattenburg and understand it well, but practicality it's entirely different. Thanks for the link, I went back to Cottles arbitrage chapter and thumbed through it again. Are these types of call parity trades even available anymore? Meaning I assume someone has written an algo already to spot the arbitrage and execute it before I could even move my mouse. If not, I would assume to make it worth the retailer trader it would have to be pretty large to be able to cover all the costs associated with doing this. Again I could be completely off and I value everyone's help as I'm very new to options trading.
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so if you have 5 you have 125 deltas, where this is valuable is that you know in advance how much you can make or lose. Regarding your question it is the computers that are really on the other side of your trade like Mav said. How would you hedge this position for example if GMCR was halted next week?
 
Quote from kinggyppo:

so if you have 5 you have 125 deltas, where this is valuable is that you know in advance how much you can make or lose. Regarding your question it is the computers that are really on the other side of your trade like Mav said. How would you hedge this position for example if GMCR was halted next week?
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I would PM you asking how I can hedge this :)

So would you say it's not worth the energy for a retail trader to try to find put-call parity arbitrage situations?
 
Quote from chicagodon:

I would PM you asking how I can hedge this :)

So would you say it's not worth the energy for a retail trader to try to find put-call parity arbitrage situations?
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Let's say you bought two at the money calls at 50 delta
before earnings, in essence you are long 100 shares of stock, earnings come out and let's say the company is .03 over expected earnings, the stock rallies 3 dollars, you could then sell 100 shares of stock and you have locked in your profits. In fact this is what some smart traders do, of course you are giving up further gains on the calls, but then you don't have to worry about where the product will open. Does this make sense?
 
Give "TastyTrade.com" a "look-see"... Tom Sosnoff and Tony Batista, two former option floor traders who have been very successful, give a free daily market broadcast. Tom is the founder of Think or Swim and sold it for about $600 million. Their daily broadcast is very informative.

Walt
 
http://blog.mdwoptions.com/ this guy was a straight shooter will never change, still actively trades respectable amount of capital, dont know much about the site but he's above board and aims at educating the novice, think he's just giving it back
 
Quote from kinggyppo:

Let's say you bought two at the money calls at 50 delta
before earnings, in essence you are long 100 shares of stock, earnings come out and let's say the company is .03 over expected earnings, the stock rallies 3 dollars, you could then sell 100 shares of stock and you have locked in your profits. In fact this is what some smart traders do, of course you are giving up further gains on the calls, but then you don't have to worry about where the product will open. Does this make sense?
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Kinggyppo buddy, Much respect, but think of what you're saying. You ignore changes in delta. The smart hedger sells more like 150 shares, as delta rises. I do this shit week in and week out.

Are there any traders out there? Am I the only non-bot person here? Probably. So much bullshit. So many reasons to ignore ET.

Anyone got an intlelligent response?

Here's one YOU TUBE sooner or later

I Doubt It.

Here it is: english beat sooner or laterYoutube sooner or later
 
Maverick74,

You really seem to have seen it all : level 2, market making, directional, stat arb, etc; Your posts are often high quality and one day (or rather one month), I intend to read ALL of them.

Can you share how you trade right now?
 
Quote from TigerBalm:

Maverick74,

You really seem to have seen it all : level 2, market making, directional, stat arb, etc; Your posts are often high quality and one day (or rather one month), I intend to read ALL of them.

Can you share how you trade right now?
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Thanks for the compliment. But I have my fair share of junk food posts that offset the quality ones. I try to "balance" it out. :)

Most of my trading content is over on the ACD thread under technical analysis. The thread has been active for about 4 years now and I try to be a value add over there.
 
Quote from donnap:

Kinggyppo buddy, Much respect, but think of what you're saying. You ignore changes in delta. The smart hedger sells more like 150 shares, as delta rises. I do this shit week in and week out.

Are there any traders out there? Am I the only non-bot person here? Probably. So much bullshit. So many reasons to ignore ET.

Anyone got an intlelligent response?

Here's one YOU TUBE sooner or later

I Doubt It.

Here it is: english beat sooner or laterYoutube sooner or later
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was trying to keep it simple, just trying to give a practical example of synthetics, maybe you can give a better example thanks...:)
 
Quote from Maverick74:

Thanks for the compliment. But I have my fair share of junk food posts that offset the quality ones. I try to "balance" it out. :)

Most of my trading content is over on the ACD thread under technical analysis. The thread has been active for about 4 years now and I try to be a value add over there.
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Thanks, I will check out the ACD thread.
 
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