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Rare arbitrage profit from call vs put prices: explain why not being taken?
- Thread starter Option Trader
- Start date
500 people saying the same thing means less to me than one person who can respond to my rebuttal.Quote from zdreg:
reread both threads. you will see that your assertions of facts have been challenged and rebutted a number of times.
Did you talk to Locate Stock? Did you check the IB supply of CTIC?
Did anyone provide an answer why institutional traders don't sell their longs buy the March calls, and sell the March puts?
Quote from Option Trader:
500 people saying the same thing means less to me than one person who can respond to my rebuttal.
Did you talk to Locate Stock? Did you check the IB supply of CTIC?
Did anyone provide an answer why institutional traders don't sell their longs buy the March calls, and sell the March puts?
This whole thread is ridiculous. If you think this is an arb then go ahead and make the trade. If it works out then fine you will make a risk free profit and prove us all wrong. If it doesn't then you would learn a valuable lesson.
You don't understand, I am afraid to place the trade, just like you! You all are saying "it can't be else it would have already been arbed, and I am also saying "but I can't understand what is missing.Quote from MTE:
This whole thread is ridiculous. If you think this is an arb then go ahead and make the trade. If it works out then fine you will make a risk free profit and prove us all wrong. If it doesn't then you would learn a valuable lesson.
1. There is no dividend
2. The opportunity should be taken even for non-arb purposes (i.e. by longs who sell their shares, buy the calls, and sell the puts).
3. OR: What Locate Stock is saying it costs to borrow the stock on the street, if e.g. IB runs out of them.
Some of you feel good about yourselves by dodging handling the questions I am posing head on.
This topic is irritating enough to me that I actually checked the IB supply of CTIC. If you don't understand how IB handles share-borrowing (and specifically the costs associated with it).. you need to educate yourself. I told you 3 days ago there are numerous threads about this topic.Quote from Option Trader:
500 people saying the same thing means less to me than one person who can respond to my rebuttal.
Did you talk to Locate Stock? Did you check the IB supply of CTIC?
Did anyone provide an answer why institutional traders don't sell their longs buy the March calls, and sell the March puts?
Here's what IB's "short stock availability tool" currently shows for CTIC:
Name Cell Therapeutics Inc
Number of Lenders with Inventory 6
Symbol @ Exchange CTIC @ NASDAQ
ISIN Code US1509345039
CUSIP 150934503
Country United States
Quantity
Available 250'000 shares
Current
Indicative Rate -70.00
The important number here is "current indicative rate". Here's IB's definition: (the rate at which dealers in the Securities Lending/Borrowing Market are willing to transact today).
It means that you need to pay additional fees worth an annualized interest rate of 70% if you want to borrow these shares. And with IB, the current indicative rate changes on (at least) a daily basis.
If you really believe LocateStock can give you something for (almost) free while IB charges 70% interest... well, hell, I don't have anything else to say. I'm drained on this topic.
Although there have been a few other informative posts, this was the most educational to me about the % IB charges.Quote from heech:
It means that you need to pay additional fees worth an annualized interest rate of 70% if you want to borrow these shares...
Nonetheless: You can still easily buy the Feb 1 calls for $.10 (= median between bid & ask, and also = last price), and sell the puts for $.55, netting you $.45, while the stock is only $.36 below the strike price, giving you an arb of $.09 minus commissions.
70% is about 6% per month, or about 2.5% till options expire, taking away about 1.75 cents, and leaving you with an arb of $.07 minus commissions.
So there you have it!
Seemingly couldn't or shouldn't?Quote from Option Trader:
Well it seemingly couldn't or shouldn't be more than the street cost such as from Locate Stock, which charges the clearance firm only 1/2 cent per share, and which is seemingly the amount passed through to the customer (at least with certain brokers).
You could save everyone (including yourself) a lot of time if you check the borrow rate with IB. You might find that CTIC and a lot of other stocks have significantly greater borrow rates than 1/2 a cent per share.
At this point, you should be mortgaging everything you have and arbing all the CTIC that you can eat.Quote from Option Trader:
500 people saying the same thing means less to me than one person who can respond to my rebuttal.
Did anyone provide an answer why institutional traders don't sell their longs buy the March calls, and sell the March puts? [/B]
And who cares why and what institutional traders are doing with CTIC. It's not going to add a penny to your account value.
If I may, I'd like to ask one of the adults here, what is LocateStock? I trade with IB and often carry a lot of short stock, at least a lot for me. Is LocateStock anything that I could, would, should use? ThxQuote from heech:
If you really believe LocateStock can give you something for (almost) free while IB charges 70% interest... well, hell, I don't have anything else to say. I'm drained on this topic.