Great ARB in FRO, Help

[lizmerrill]

Correct me if I am wrong here:
For symbol FRO (Frontline), close of 50.63 on Fri,
Go short at 50.63 100 shares, and sell a 50 put at 3.00 (bid).
Buy a 50 call at 1.10 (ask),
for a locked in gain of 2.63 points.

By going short and selling a put, you are effectively selling a synthetic call, cover your call simultaneously at 1.10 for
a lock of 2.63 points.

What's the catch?

Liz

 

[daniel5198]

the catch is that they are going Ex-Dividend on 10-Oct-07 for a huge div. sorry. you'll have to try harder.

 

[MTE]

When are you rookies gonna learn that there are no arbs in options! If the options are priced a certain way then there's a darn good reason for this!

 

[spindr0]

1) There are no free lunches

2) If it looks too good to be true, it is

3) See OP's reply that they are going Ex-Dividend on 10-Oct-07 for a huge dividend

 

[daddy'sboy]

Nothing changes - same questions, same mistakes.
But how else will the newbies learn? And we were all newbies once, right?
db

 

[daniel5198]

Quote from spindr0:

1) There are no free lunches

2) If it looks too good to be true, it is

3) See OP's reply that they are going Ex-Dividend on 10-Oct-07 for a huge dividend

OP???

 

[nonprophet]

Quote from daniel5198:

OP???

he means Old Prick

 

[daniel5198]

Quote from nonprophet:

he means Old Prick

non-profit suits you better

 

[spindr0]

OP = Other Poster

 

[bigbiscuit]

Quote from spindr0:

OP = Other Poster

I always thought it was Original Poster?