Risk-less collars and margin

Robert Morse said:
His example was long stock, long put and short calls. Like we both said, that is the conversion.
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Sorry, I transposed what you wrote and priced the reversal in ZIM which threw me off. Ppl will find lots of edge in reversals until they realize it's a HTB condition or a div.
 
When I was a wire clerk and then broker from 1982 until the end of 1984, we did a lot of Box Spreads and R/C. The box spreads were to move income to the next year - before the tax changes, and the R/C were for off floor traders to get long stock to short or for floor traders to reduce debit balances. When I became a MM, I made markets in them. Our debit/credit rates were so much better than Retail, we could both make money. And for HTB stocks, we were exempt from locates. Until REG SHO, it was easy money. Even back when REG-SHO started, we had until the 14th day. I was not big, but played a little. Ah, the good old days.

destriero said:
Sorry, I transposed what you wrote. Ppl will find lots of edge in reversals until they realize it's a HTB condition or a div.
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Robert Morse said:
This is called a Conversion. The short side is called a Reversal.

I had so many more questions, but was hoping someone else would ask. Riskless collar? 10%? SPAN/PMA? I have never hear of a Riskless collar,
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I thought only market-makers called them that. Apologies.
 
The odds of finding one mispriced are slim. That does not mean there is not a price where you and the MM can both benefit. An example would be that I trade in my ROTH. I can't short a stock. I can do a conversion and then sell the long stock, leaving me with the long put and short call. I have also found stocks I want to be long. Ones I am long that are very hard to borrow. If I do the reversal vs my long stock, I end up with short puts and long calls at a better price than just long the stock because the puts are very fat, and the calls are cheap. At expiration I get my log stock back at a lower net price.

SoCalOptionsWriter said:
By any chance any services scan for reversals/conversions?
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destriero said:
Nobody is going to give you edge on a 3-way so you will lose comms even if you fill the above prices.
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I’ve been finding no commission and/or fee trades at one broker and low fee at others. I do wonder about the interest on the per trade margin, though.
 
Robert Morse said:
The odds of finding one mispriced are slim. That does not mean there is not a price where you and the MM can both benefit. An example would be that I trade in my ROTH. I can't short a stock. I can do a conversion and then sell the long stock, leaving me with the long put and short call. I have also found stocks I want to be long. Ones I am long that are very hard to borrow. If I do the reversal vs my long stock, I end up with short puts and long calls at a better price than just long the stock because the puts are very fat, and the calls are cheap. At expiration I get my log stock back at a lower net price.
More...

Confused. You’re trading in a Roth and you are left with short call after selling the stock? You can do that?
 
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