ha. I found one the other day. I thought i was missing something so I called optionsxpress and the the lady was like uhhhhh that looks pretty good....bc there was ACTUAL volume on the mispriced position. That was a few weeks back, but it was on MOT. What if you found such a case but it was at the same strike price, but 1 month later? I hear you of course about actually putting the spread on, im still using my fake money until i get better at this.
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options idea...
- Thread starter jonbig04
- Start date
ha. I found one the other day. I thought i was missing something so I called optionsxpress and the the lady was like uhhhhh that looks pretty good....bc there was ACTUAL volume on the mispriced position. That was a few weeks back, but it was on MOT. What if you found such a case but it was at the same strike price, but 1 month later? I hear you of course about actually putting the spread on, im still using my fake money until i get better at this.
It was the other day and then it was a few weeks ago. Do you really believe that all the market making firms on all the exchanges where that option is listed all mispriced one of the legs in the exact same way at the exact same time. Also, non of the off floor firms picked it up at all?
Quote from xflat2186:
It was the other day and then it was a few weeks ago. Do you really believe that all the market making firms on all the exchanges where that option is listed all mispriced one of the legs in the exact same way at the exact same time. Also, non of the off floor firms picked it up at all?
geeze...the other day....a few weeks ago, same difference. All I know is that the call expiring last month and the call expiring in Jan 09, we're very close in price. I dont know why, or how, but I can read. Maybe some idiot bought them at a really high price for no reason. Who knows. I didnt buy it so I cant say if I could have gotten it at the same price, but the LAST was what i was looking at. Options are traded by people. People make mistakes. I think if you can manage to find one of those mistakes then who knows.
More likely you were looking at the last sale and the last sale in the long term call may have been hours or days prior and the stock was a lot lower. Where as the current market in those longer term calls was nowhere near the last sale price or the short term call current market. As people have pointed out unless you're missing some risk information those prices would not be close. Perhaps the longer term call was a bastardized series which was part of some M and A deal or something else.
Quote from xflat2186:
More likely you were looking at the last sale and the last sale in the long term call may have been hours or days prior and the stock was a lot lower. Where as the current market in those longer term calls was nowhere near the last sale price or the short term call current market. As people have pointed out unless you're missing some risk information those prices would not be close. Perhaps the longer term call was a bastardized series which was part of some M and A deal or something else.
Could be for sure. Like I said, I didnt try to buy them so I cant say.
Quote from jonbig04:
What if you found such a case but it was at the same strike price, but 1 month later? I hear you of course about actually putting the spread on, im still using my fake money until i get better at this.
Any time you think you can buy a call spread or a put spread for zero, forget about fake money and put in a real order. It won't get filled, but you'll get some risk-free practice. And you'll find out for yourself that the markets are a little more efficient than you think - unfortunately!
And if perchance you get filled - please feel free to come back and gloat!
I have to agree with the above skeptics. Options which are NOT the front month will have low volume... the last price (if relied on) will prove to be a very bad indicator. You'll have to use the bid/ask on the back months.
I wish I could go back and see what the bid was! I really wish I could get some of this terminology down.
I've been doing this with paper money for a while. The same thing I explained in my first post. Of course usually the hedge/long position costs 50% more than I can sell the short one for.
I did this with aapl last month and it worked really well. The stock rose to where the positions I bought were in the money and the ones I sold weren't. Made around 47% on the fake $5,000 I put in.
I did it with GS about a week ago and the bastard keeps dropping. Im guessing I should always buy some puts in case this happens again.
I just wish I knew what this was called bc I kind of just thought it up one day, but im sure there's a specific name for it.
I've been doing this with paper money for a while. The same thing I explained in my first post. Of course usually the hedge/long position costs 50% more than I can sell the short one for.
I did this with aapl last month and it worked really well. The stock rose to where the positions I bought were in the money and the ones I sold weren't. Made around 47% on the fake $5,000 I put in.
I did it with GS about a week ago and the bastard keeps dropping. Im guessing I should always buy some puts in case this happens again.
I just wish I knew what this was called bc I kind of just thought it up one day, but im sure there's a specific name for it.