Riskarb's combo to fly conversion journal

Quote from riskarb:

The IMDC reverse conversion earned $4.30 today! Many thanks to whoever posted that ticker here. Dinner is on me.
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You're welcome, but I'll stick to my instant mac & cheese with sliced hot dogs. :D BTW, good trade on AAPL.
 
Quote from riskarb:

The IMDC reverse conversion earned $4.30 today! Many thanks to whoever posted that ticker here. Dinner is on me.
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Would you mind posting a few details on how you traded it?
 
Quote from Cache Landing:

Would you mind posting a few details on how you traded it?
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Sure, the April long call/short put 90-strike synthetic long was offered at $86.10 with the natural shares trading at $91.70. The AGN deal implied $96 on the share-tender. The put was 5.70 bid with the call offered at 1.80. Strike - put + call = long cost basis[$86.10] on the long synthetic stock position.

Go long the synthetic and sell the natural shares. To simplify things we'll ignore carry -- the synth should trade = the natural shares at $91.70.

I started by shorting the natural shares -- I'd expected to get an error message on IB stating the shares were unavailable to source/borrow. When the trade went through I legged the synthetic.

I have never seen a conversion/reversal trade so far out of line, including crash-scenarios. Whatever the trigger, the reversal traded within a point of parity today. I don't know what caused the convergence, but I wasn't about the ask questions. I covered the 3-way at the market this morning and booked >4 handles on a 2-day hold.

BTW; Country Crock macaroni and cheese is the shiz.
 
GOOG looks decent for a fly candidate. I'd take some long deltas, selling the Apr 450 combo. Somewhat ambivalent to bearish on the broad market, but I'm looking to get 800bp and $7 in premium out of this combo within a week with a move to neutrality.
 
Quote from IV_Trader:

IB's option screener ( beta version) shows highest P/C ratio for ticker IYR ( Real Estate iShares) . Housing Starts and Building Permits on Eco calendar later this week , hmmm...
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ok... heavy buying on KBH March puts today.
Riskarb , would you take a hedged entry like short the KBH put (vols at 36) and long the index put (IYR , vols at 17) here ?
 
Quote from IV_Trader:

ok... heavy buying on KBH March puts today.
Riskarb , would you take a hedged entry like short the KBH put (vols at 36) and long the index put (IYR , vols at 17) here ?
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Sure, provided the puts were skewed and I traded in a ratio favoring the index, long gamma, zero outlay.
 
$450 Combo? or $350 Combo? I do not see GOOG even getting over $400 until MAY if all things are positive lol.

I am gonna look into FLYing around $350. A new strategy I am testing is to buy the really wide FLY and then sell off imbedded FLYs as the stock moves around to collect premium to cover the cost and hopefully a net credit.

Quote from riskarb:

GOOG looks decent for a fly candidate. I'd take some long deltas, selling the Apr 450 combo. Somewhat ambivalent to bearish on the broad market, but I'm looking to get 800bp and $7 in premium out of this combo within a week with a move to neutrality.
More...
 
Quote from optioncoach:

$450 Combo? or $350 Combo? I do not see GOOG even getting over $400 until MAY if all things are positive lol.

I am gonna look into FLYing around $350. A new strategy I am testing is to buy the really wide FLY and then sell off imbedded FLYs as the stock moves around to collect premium to cover the cost and hopefully a net credit.
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350, typo
 
Quote from optioncoach:

I am gonna look into FLYing around $350. A new strategy I am testing is to buy the really wide FLY and then sell off imbedded FLYs as the stock moves around to collect premium to cover the cost and hopefully a net credit.
More...

I think you'll be disappointed with the gains from theta and neutrality on the baby flies.
 
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