I think that's the whole point of the example, since he says "I am saying to the OP is that, this will not happen in real life".
Dividend strat
- Thread starter misterkel
- Start date
Such a stupid guy
Per year? Your options are for November, which is less than 1 month
No, the NOV. payout is .87 and the following 3 are the same.
Div is 21% - which I can't wrap my mind around. It's a pretty big fund, so it's stable enough. News doesn't show any major negatives.
Anyway - is this a risk-free profit? I think so, but may be missing something.
ET is the result of the merger 4 days ago of ETE and ETP so I'm guessing that payout is a spurious number generated by IB as a result of a screw up with "The Algorithm's" automated pull of the data post merger. There is no dividend announcement from them for that amount (or for the next 4 dividend payments, which would be crazy for an LP like ET) and it doesn't comport with past dividend payments of the previous LPs. There are also some B and C class shares that IB might be mistakenly getting info from, although even their dividends aren't at that level (Maybe added together?).
Attachments
@Sig - good reply - thanks. Div will be .305, found by emailing ET's investor services.
Meantime - check this play out.
Screen capture was a bit late, but IBM was at 125.00. Short synthetic ATM 125 was 1.18 ask (probably obtainable for less - IBM near term ATM options should be pretty liquid).
The dividend pays 1.57.
1.57-1.18 = 0.39
.39/125=0.00312
.00312*26 periods (it's 2 weeks out, so this annualizes it) = .08112 = 8% annualized return
This looks risk-free to me. It's also a worst-case, given the conditions - could be improved by getting in at 1.05 on the short side.
Now 8% is not awesome, but for risk-free return, it seems decent. If margined to 3 times, it would return 24% - 5% (borrow rate of 2.5%*2) = 19%.
19% risk-free would be salivary.
I don't like pissing matches - and I'm happy to be wrong. I just want to learn. Can somebody show me my mistakes - or confirm if the logic seems solid?
Meantime - check this play out.
Screen capture was a bit late, but IBM was at 125.00. Short synthetic ATM 125 was 1.18 ask (probably obtainable for less - IBM near term ATM options should be pretty liquid).
The dividend pays 1.57.
1.57-1.18 = 0.39
.39/125=0.00312
.00312*26 periods (it's 2 weeks out, so this annualizes it) = .08112 = 8% annualized return
This looks risk-free to me. It's also a worst-case, given the conditions - could be improved by getting in at 1.05 on the short side.
Now 8% is not awesome, but for risk-free return, it seems decent. If margined to 3 times, it would return 24% - 5% (borrow rate of 2.5%*2) = 19%.
19% risk-free would be salivary.
I don't like pissing matches - and I'm happy to be wrong. I just want to learn. Can somebody show me my mistakes - or confirm if the logic seems solid?