Quote from hft_boy:
You are missing something. Put on a position and you will find out quickly.
So, what exactly may happen? Early exercise of the short call/put?
How early?
BTW, SPX options do not have this disparity.
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SPY put/call imparity - arbitrage or what?
- Thread starter rocky_raccoon
- Start date
So, what exactly may happen? Early exercise of the short call/put?
How early?
BTW, SPX options do not have this disparity.
Quote from rocky_raccoon:
So, what exactly may happen? Early exercise of the short call/put?
How early?
BTW, SPX options do not have this disparity.
http://bit.ly/14tDPDD
Quote from rocky_raccoon:
So, what exactly may happen? Early exercise of the short call/put?
How early?
BTW, SPX options do not have this disparity.
In your example you'd short the 146put/long the 146 call and short stock and your risk graph would show a profit of $20 at expiry. On the 15th, you'd pay the dividend on short stock thus negating the advantage, and you'd have to exercise your long call to capture the dividend or else you'd be out that amount. HTH.
Ok, I guess I am not the first one who came up with this cute idea.
Thank you, everyone. Case closed.
Thank you, everyone. Case closed.
What if the instrument being traded (SPY or other individual stock) was expiring at a particular time/date and there happened to be neither an upcoming ex-div or an 'earnings call' event before the expiration?
- How would this affect the overall 'risk' of the short box-spread?
--
On the same note:
- If one of the legs (out of 4 total) was exercised, how does the broker handle it? Does the broker-platform simply neutralize all 4-legs and you lose the difference between the premium you received at the beginning and cost to close each leg?
-Thanks
- How would this affect the overall 'risk' of the short box-spread?
--
On the same note:
- If one of the legs (out of 4 total) was exercised, how does the broker handle it? Does the broker-platform simply neutralize all 4-legs and you lose the difference between the premium you received at the beginning and cost to close each leg?
-Thanks